Google loses appeal against $2.7 billion antitrust fine over its comparison-shopping practices

Google has lost its appeal against the $2.7 billion antitrust fine that was levied against it four years ago by the European Commission.

The fine was for Google’s promotion of its own comparison-shopping service in prominent boxes at the top of its search results—a practice that left competing comparison-shopping services at an unfair disadvantage, given Google’s near-total domination of search in Europe. (In Europe, unlike in the U.S., an antitrust violation can take place even if consumers are not demonstrably harmed, if a company’s actions severely harm competition.) Google was subsequently fined billions of euros twice more over other antitrust violations, and it launched an appeal in each case.

On Wednesday, the European Union’s General Court—the court that hears appeals against decisions made by the European Commission—upheld the Google Shopping fine. It mostly dismissed the company’s appeal, though it did say the Commission had not backed up its claim that Google’s conduct had anticompetitive effects on the general-search market (a factor that had no bearing on the amount of the fine). Google has not yet said whether it will further appeal this decision to the Court of Justice of the EU, its last hope.

The ruling is a huge boost to the reputation and likely future plans of Margrethe Vestager, the EU’s competition commissioner. Last year, the General Court annulled her mammoth $14.8 billion back-tax bill for Apple in Ireland, which was a serious blow. This time, she has prevailed, which could encourage her to keep hitting Google over other alleged violations.

“Today’s judgment delivers the clear message that Google’s conduct was unlawful, and it provides the necessary legal clarity for the market,” the Commission said in a statement. “Comparison shopping delivers an important service to consumers, at a time when e-commerce has become more and more important for retailers and consumers. As digital services have become omnipresent in our society nowadays, consumers should be able to rely on them in order to make informed and unbiased choices.”

The 2017 Google Shopping fine was higher than had been anticipated at the time. Although Google was quick to appeal, it did change its practices by auctioning off the prominent comparison-shopping ad slots on its search pages—with Google itself being one of the bidders. Competitors subsequently complained that these auctions were oversubscribed, resulting in high fees that of course benefited Google.

On Wednesday, the General Court indicated it was not impressed with the changes Google had made. “Google favors its own comparison-shopping service over competing services, rather than a better result over another result,” it said in a statement. “Even if the results from competing comparison-shopping services were more relevant, they could never receive the same treatment as results from Google’s comparison-shopping service in terms of their positioning or their display.”

“While Google did subsequently enable competing comparison-shopping services to enhance the quality of the display of their results by appearing in its ‘boxes’ in return for payment, the General Court notes that that service depended on the comparison-shopping services changing their business model and ceasing to be Google’s direct competitors, becoming its customers instead.”

Multiple penalties

The penalty was the first in what became a series of (so far) three: In 2018, the Commission fined Google $5 billion for blocking Android device manufacturers who preinstall Google apps from using non-Google versions of the mobile operating system, and the following year it levied a $1.7 billion penalty over the terms Google imposed on companies that use its AdSense for Search box on their websites.

Vestager’s directorate this year also launched a fresh probe into Google’s role in online display-advertising technology, to see if Google was disadvantaging its ad-tech rivals by not allowing them to see certain data about user identity and behavior.

And there are plenty of other complainants waiting in the wings, from Google competitors that want better and fairer positioning in search results for their restaurant, hotel, and flight search services. These potential cases have a lot in common with the Google Shopping case, so Wednesday’s General Court ruling will give them a great deal of encouragement.

Yelp, which has been shouting about Google’s allegedly anticompetitive practices in local search for many years, was quick to respond to the ruling. “The European Commission must now take this favorable precedent and prosecute Google for its parallel abuses in the local search market and allow services like Yelp to compete on the merits,” said Luther Lowe, the firm’s public policy chief, in an emailed statement.

Foundem, the British comparison-shopping service that kicked off the Commission’s intense scrutiny into Google with a complaint 12 years ago, welcomed the dismissal of Google’s appeal but said it “does not undo the considerable consumer and anticompetitive harm caused by more than a decade of Google’s insidious search manipulation practices. Nor will it restore competition to the beleaguered comparison-shopping market.”

The company called on the Commission to start forcing Google to give rival shopping services equal treatment, as its 2017 decision had promised. “Google’s participation in the auction isn’t real,” Foundem argued. “In stark contrast to rival [comparison-shopping services] who are compelled to bid away the vast majority of any anticipated profit, Google’s own bids are just meaningless internal accounting that cost it nothing.”

‘Equal opportunities’

BEUC, the European Consumer Organization, also hailed the ruling and called for more action from the Commission. “Google’s misleading and unfair practices harmed millions of European consumers by ensuring that rival comparison-shopping services were virtually invisible. As a result, Google prevented consumers from accessing product information and potentially cheaper prices provided by rival comparison-shopping services, from shoes to dishwashers,” said BEUC chief Monique Goyens in a statement.

“Today’s General Court ruling makes clear that Google must give equal opportunities to all market players to compete on the basis of their own merit and gain consumers’ trust on an equal footing. In light of the ruling, we ask the European Commission to ensure that Google does not abuse its dominance as a search engine by giving its own services preference in other areas,” she added.

Jonas Koponen, an antitrust lawyer at Linklaters, said in an emailed statement that the ruling “vindicates the Commission’s enforcement action in this first in a series of landmark Big Tech decisions,” and that it could have a big impact on both general tech antitrust enforcement and the EU’s in-the-works new rules for large online platforms.

However, Koponen noted that the $2.7 billion fine was unlikely to be a deterrent to a company of Google’s girth, and that the “remedies” imposed on Google thus far—in other words, the behavioral changes Google is supposed to make in order to be more pro-competitive—“appear not to have been effective either.”

Google had not responded to a request for comment at the time of publication.

However, Google does have some cause for cheer today. Over in the U.K., it won an appeal against an attempted class-action lawsuit by consumer advocates, over Google’s alleged bypassing of iPhone privacy settings to collect user data, nearly a decade ago. The Supreme Court said people couldn’t just sue Google over the “loss of control” of their personal data, and would have to prove damage or distress.

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