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The European Union Issues Record Fine against Google in Antitrust Case

“Just google it.” Google’s search engine is so dominant that the company name has become a verb synonymous with conducting an Internet search. According to the European Commissioner for Competition, Margrethe Vestager, Google has become too dominant, at least with respect to comparison shopping and product searches. For that reason, the European Union (EU) spent seven years investigating Google’s trade practices. The investigation culminated in 2017 with with a record fine of $2.7 billion and a ruling that Google had breached EU antitrust regulations by abusing its dominant position in the search engine market.

Google Put Its Shopping Results above Other Search Results

The EU claimed that for nearly ten years, Google had promoted its own comparison shopping service at the expense of competitors. It did this by “positioning and prominently displaying its comparison shopping service in its general search result pages, irrespective of its merits.” As a result, “users [did] not necessarily see the most relevant results in response to queries—to the detriment of consumers and rival comparison shopping services.”

Google has contended that it cannot change its core software and that the results in its search algorithms are based on relevance. In addition, Google has argued that it has actually boosted traffic to its Web competitors. Indeed, search engines have proliferated on the Web, suggesting that Google’s success has not eliminated competition.

Nevertheless, the EU’s decision ordered Google to change the way it displays search results in the EU—or face more fines. When Google shows comparison-shopping services in response to a user’s query, the search results should show the most relevant services first.

Google has appealed the EU’s order. Experts predict that the dispute could continue for years.

The Compartmentalization of a Search on the Web

More and more frequently, Internet users do not engage in general searches. Instead, they know exactly where to go to obtain product information. When they want information on movies, for instance, they go to the Internet Movie Data Base (IMDB) rather than to Google. When they want information on music, they go to iTunes. When they want to search for the cheapest airfares, they go to Kayak or similar sites. When they want to find the best rates on hotels, they go to sites such as hotels.com (https://www.hotels.com/.), tripadvisor.com, and trivago.com. And when they are interested in buying a product, they frequently go to Amazon or eBay. Amazon, in particular, has fine-tuned its ability to generate advertising revenues through its Amazon-sponsored links.

And, of course, social media must be considered. More people are on social media sites than ever before, particularly on their mobile devices. Users spend four times more time on Facebook than they do on Google. These users often “crowdsource”—that is, look for answers from Facebook friends rather than search on Google. Facebook is also becoming increasingly competitive with Google in the services it offers, including mobile payments and the Facebook Messenger instant-messaging service.

Critical Thinking

  • How does the increasing popularity of specialized search engines weaken the EU’s argument that Google has harmed consumers?

NOTE: No more than two pages.