The Strategist

Google finds a way to avoid EC’s huge fine

09/27/2017 - 10:13

Google Corporation will allocate its online shopping service Google Shopping to a separate unit to comply with requirements of the European Commission and to avoid a serious penalty due to the dominant position in the European market. This is reported by Bloomberg.

Jon Russell
Jon Russell
The new unit will operate in Europe separately from Google, with out-of-pocket cost of advertising. In this case, Google Shopping will compete with other companies in the search results. It is reported that the panel with ads at the top of the page will change. Competitors will be able to participate in auctions and buy slots on panels with advertising.

At the end of June, the EU antitrust regulator fined Google a record 2.42 billion euros ($ 2.7 billion) in the case of the company's abuse of the dominant position in the market when promoting its Google Shopping service. The European Commission gave Alphabet Inc., Google's holding company, 90 days to put an end to "illegal actions." Within 60 days, Google had to report on what measures are planned to take to solve the problem.

It was reported that if the company did not comply with the requirements of the European Commission, it could be fined for an amount equivalent to 5% of the average daily turnover of Alphabet. The decision was made after a seven-year investigation, caused by a number of complaints from the company's competitors, in particular from Microsoft.

As the European Commission reported, the results of the search for products through the Google search engine were distorted in favor of Google Shopping service. To increase the number of clients of its own service, Google significantly lowered ratings of competing projects, in connection with which their proposals were not issued on the first page of the search.

The fine inflicted on Google became a record among EU antitrust cases, and it seriously spoiled the report of Alphabet. At the end of July, the holding reported the strongest fall in net profit since 2008. In the second quarter of this year, the key figure fell by almost a third to $ 3.5 billion. Last time Alphabet recorded such a sharp drop in profits during the 2008 crisis. After the failure the company's share price fell by more than 3%. In early September, Google filed an appeal to the European Court against the decision of the European Commission on the imposition of a fine.


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