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Google Stock Loses $5.8 Billion After the EU’s Massive Fine

The European Union’s watchdog slapped Google with a larger-than-expected fine on Tuesday for manipulating its shopping search results.

The European Commission’s $2.7 billion fine, which was initially thought to be closer to $1 billion, helped push down the value of Google’s parent company Alphabet by 1.1% or $8.5 billion in market capitalization overnight. “In search results, Google consistently gave prominent placement only to its own products, Google also demoted rival companies, rival comparison shopping services, which means a lower ranking in generic search results,” commissioner Margrethe Vestager said in a speech following the decision.

Google’s woes spread to other stocks Tuesday, with the tech-heavy Nasdaq index down 0.4% and Facebook down 1% by the stock market’s open. The slip comes amid fears that Google’s EU fine will set a precedent—forcing other Internet companies to shift business strategies in the EU.

“The decision shows the exceptionally high standard that dominant businesses such as Google can be held to where otherwise lawful activity can become unlawful simply by virtue of the market share they have,” said Oliver Fairhurst, an associate at Lewis Silkin.

Interestingly, shares for Amazon have remained relatively flat, perhaps thanks in part to an interview Vestager gave early Tuesday. When CNBC asked about whether Amazon could be considered a competitor to Google, Vestager noted that Amazon was different from Google and that the two were not direct competitors.

“What we find is these are two different things,” Vestager said. “On Amazon, you find retailers that want Amazon to do part of their services. Those, you don’t find to the same degree on Google Shopping.”

At any rate, a 1% slide in Google’s stock price isn’t huge, suggesting that whatever effect the decision might have on Google’s business, investors still believe it to be minor.

“While this result is headline negative and could force changes to the display and ranking of shopping search results, Alphabet is considering appeal and it’s important to note this fine still only equates to $3.85 per GOOGL share,” Cantor Fitzgerald’s Kip Paulson wrote in a Tuesday note, maintaining its price target of $1,070 on the stock. Shares of Alphabet currently trade at about $961.