Google Shopping

The European Commission has hit Google with a record fine of €2.42 billion ($2.72 billion) for abusing its dominant market position and tweaking search results to favor its Google Shopping service to the detriment of its direct competitors.

The EU says that Google intentionally and knowing promoted its Google Shopping listings on its search engine front page, at the top of all other search results.

Additionally, the EU found Google guilty of tinkering with its search classification algorithm in a way that buried listings from competitors.

"Evidence shows that even the most highly ranked rival service appears on average only on page four of Google's search results, and others appear even further down," the European Commission wrote today in its decision to a long-winding antitrust case that started in 2010.

Antitrust investigation started following Microsoft's complaint

Ironically, the complaint against Google abusing its dominant market position came from Microsoft, a company that was also fined for similar practices when it pushed Internet Explorer on Windows users.

At the heart of the fine is a service launched in 2002 under the name Froogle, rebranded in Google Product Search in 2008, and later rebranded as Google Shopping in 2013.

Described by the EU as a comparison shopping service, Google Shopping worked by taking products from various stores and allowing users to compare prices and features in order to select the best products they wanted to buy.

When Google launched Froogle, there were already several comparison shopping services on the market. Documents and data obtained by the European Commission during its investigation showed that Froogle was a failed product up until Google decided to place it above other search results and later demoted its competition to lower search results pages.

"Froogle simply doesn't work," said one Google document from 2006 obtained by the EU. Things changed two years later, and the EU says Google's service started to take off once Google began aggressively pushing the service in its search results.

Rival services lost over 80% of their traffic

Market studies have shown that top Google search results — the position where Google Shopping listings were displayed — usually garner around 35% of all search engine traffic, while results on the first page get 95%. Furthermore, things get worse with second-page listings, which only get 1% of the traffic. By downgrading rival services to page four and beyond, Google had effectively killed traffic to its competitors.

According to statistics obtained by EU investigators, rival services lost between 80% and 92% of their normal traffic.

"This shows that Google's practices have stifled competition on the merits in comparison shopping markets, depriving European consumers of genuine choice and innovation," the EU ruled.

Google faces two more antitrust investigations

The fine was passed down today, and Google has 90 days to comply or face new penalties. Furthermore, based on the EU's ruling, Google is now open to civil litigation from past rivals it tried to kill off.

In a blog post today, Google tried to explain "the other side of the story," saying it promoted Google Shopping because it felt their service was superior to anything else on the market. The company also hinted it might appeal the ruling.

The EU and Google will be locked in many legal battles in the upcoming years. The European Commission is also currently investigating Google in two other antitrust cases.

One is for the Android mobile operating system, where "Google has stifled choice and innovation in a range of mobile apps and services by pursuing an overall strategy on mobile devices to protect and expand its dominant position in general internet search," and the second is for AdSense, where the EU things "Google has reduced choice by preventing third-party websites from sourcing search ads from Google's competitors."