Google’s €2.42bn fine upheld: EU court sends strong message to Big Tech

The European Court of Justice (ECJ) has upheld a landmark €2.42 billion fine against Google, reinforcing a crucial precedent in the regulation of tech giants. The ruling confirms that Google’s actions to favour its own price comparison shopping service over competitors’ offerings were in violation of European Union competition law. This decision marks the end of a lengthy legal battle that began in 2017 when the European Commission (EC) first imposed the fine on Google, accusing it of market abuse by unfairly promoting its shopping service over others in search results.

Background and Significance of the Ruling

The European Commission’s initial investigation revealed that Google, leveraging its dominant position in the online search market, systematically favoured its own price comparison shopping service by displaying it prominently in visually rich “boxes” at the top of search results. In contrast, competing services were relegated to lower positions, appearing as plain blue links, which resulted in significantly lower visibility and click-through rates. This was determined to be an abuse of market dominance, particularly in the 13 countries across the European Economic Area (EEA) where the practice was identified, including the UK, France, Germany, and Spain.

Following the imposition of the fine in 2017, Google appealed the decision, arguing that the Commission had failed to prove its actions had a substantial impact on competition. The General Court of the European Union, however, upheld the fine in 2021 but partially annulled the Commission’s findings concerning Google’s impact on general search services. Google’s subsequent appeal to the ECJ has now been dismissed, with the court confirming that the company’s practices within specialised product search markets were indeed anti-competitive.

Court’s Reasoning and Broader Implications

The ECJ clarified that EU law does not penalise companies for being dominant players in the market but rather for abusing that dominance to stifle competition. The ruling underlined that Google’s self-preferencing behaviour—giving preferential treatment to its own services—was discriminatory and did not represent fair competition on the merits. The court stated that such conduct restricts the “maintenance or growth of competition” in markets already weakened by the presence of a dominant player like Google.

This case has significant implications for Google’s parent company, Alphabet Inc., which was made jointly and severally liable for €523.5 million of the total fine. Google’s spokesperson, Rory O’Donoghue, expressed disappointment with the ruling but noted that the company had already made changes to comply with the Commission’s decision, resulting in “billions of clicks for more than 800 comparison shopping services.”

Wider Efforts to Regulate Big Tech

The ruling is a critical part of the European Union’s broader campaign to regulate major tech companies and curb anti-competitive practices. Margrethe Vestager, European Commission Vice-President and a staunch advocate for tougher regulations on Big Tech, hailed the decision as a significant victory. The Commission has gained new tools, such as the Digital Markets Act (DMA), to enforce regulations more robustly. The DMA specifically prohibits tech giants from favouring their own products and services over competitors on their platforms, marking a new era of digital market regulation.

Google faces ongoing scrutiny for other alleged anti-competitive practices, including its advertising technology and Android operating system. The company is still appealing a record €4.3 billion fine concerning its Android mobile operating system. The EC is also investigating Google for potential non-compliance with the DMA in areas like self-preferencing on Google Search and its app store.

Impact and Future Outlook

The €2.42 billion fine is one of the largest ever imposed under EU competition law and signals the European Union’s resolve to hold Big Tech accountable. This ruling sends a clear message to dominant digital platforms: compliance with EU antitrust laws is non-negotiable, and practices that disadvantage smaller competitors will not be tolerated.

As the legal landscape around digital market regulation continues to evolve, other tech giants are likely to face increased scrutiny from regulators across the globe. For Google, the decision not only represents a costly legal defeat but also underscores the challenges it faces in navigating stringent regulatory frameworks while maintaining its business model.