investigations into the company's dominance in searches and smartphones.
It is the
biggest fine the EU has ever imposed on a single company in an antitrust case,
exceeding a 1.06-billion-euro sanction handed down to U.S. chipmaker Intel
(INTC.O) in 2009.
The European
Commission said the world's most popular internet search engine has 90 days to
stop favoring its own shopping service or face a further penalty per day of up
to 5 percent of Alphabet's average daily global turnover.
The fine,
equivalent to 3 percent of Alphabet's turnover, is the biggest regulatory
setback for Google, which settled with U.S. enforcers in 2013 without a penalty
after agreeing to change some of its search practices.
The EU
competition enforcer has also charged Google with using its Android mobile
operating system to crush rivals, a case that could potentially be the most
damaging for the company, with the system used in most smartphones.
The company
has also been accused of blocking rivals in online search advertising.
The
Commission found that Google, with a market share in searches of over 90 percent
in most European countries, had systematically given prominent placement in
searches to its own comparison shopping service and demoted those of rivals in
search results.
"What
Google has done is illegal under EU antitrust rules. It denied other companies
the chance to compete on the merits and to innovate. And most importantly, it
denied European consumers a genuine choice of services and the full benefits of
innovation," European Competition Commissioner Margrethe Vestager said in
a statement.
Google said
its data showed people preferred links taking them directly to products they
want and not to websites where they have to repeat their search.
"We
respectfully disagree with the conclusions announced today. We will review the
Commission's decision in detail as we consider an appeal, and we look forward
to continuing to make our case," Kent Walker, Google's general counsel,
said in a statement.
The action
follows a seven-year investigation prompted by scores of complaints from rivals
such as U.S. consumer review website Yelp (YELP.N),
TripAdvisor (TRIP.O),
UK price comparison site Foundem, News Corp (NWSA.O)
and lobbying group FairSearch.
The penalty
payment for failure to comply would amount to around $12 million a day based on
Alphabet's 2016 turnover of $90.3 billion. The Commission did not specify what
changes Google had to make.
"This
decision is a game-changer. The Commission confirmed that consumers do not see
what is most relevant for them on the world’s most used search engine but
rather what is best for Google," said Monique Goyens, director general of
EU consumer group BEUC.
Thomas
Vinje, legal counsel to FairSearch, welcomed the Commission's findings and
urged it to act on Google's Android mobile operating system following its 2013
complaint that Google restricted competition in software running on mobile
devices.
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