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EU hits Google with record-breaking $2.7 billion fine

By Robert Njeru

Google will have to pay an antitrust fine of a record $2.7 billion (€2.4 billion) after the European Union regulators found it guilty of unfairly steering consumers to its own shopping platform and hence denying customers “a genuine choice.”

The U.S. tech giant risks further penalties from the European Commission if it doesn’t change its behavior within 90 days. This is the latest high profile incident involving a huge American company doing business in Europe.

According to Margrethe Vestager, the bloc’s top antitrust official, Google denied other companies an opportunity to compete fairly and this is illegal under European Union (EU) antitrust rules. “Even worse, the search engine denied Europeans customers the full benefits of innovation and a genuine choice of services”, she added.

In a statement released by Google, the company has defended itself claiming that it presents adverts in ways that are beneficial for sellers and buyers.

A Google spokesperson has said that the company is considering an appeal; they are currently evaluating the Commission’s decision. Google’s official stand is that it respectfully disagrees with the decision against it.

According to the Commission, the leading search engine relegated results from competitors to areas where potential consumers were less likely to click while amplifying placement in search results to its own shopping service.

As of end of March, Alphabet, Google’s owner, had $92.4 billion in cash. The $2.7 billion fine is just a drop in the ocean since it represents just over 2.5% of Google’s revenue last year.

The European Commission could have fined Google a figure of around $9 billion or as much as 10% of its annual sales.

Vestager revealed that they had received complaints from hundreds of companies, including some based in the U.S., regarding Google’s unfair practices. She said that the search engine’s rivals could demand compensation in national courts within the EU.

It is worth noting that Alphabet shares dropped by 1.2% in premarket trading.

In 2009, Intel set the record for the biggest EU antitrust fine after it was slapped with a fine of $1.2 billion (€1.06 billion). The company is still fighting against that decision.

The EU has also accused the Silicon Valley giant of imposing restrictions on Android device mobile network operators and manufacturers.

In May, the commission pushed Amazon into modifying its distribution agreements with e-book publishers. In the same month, Face book was fined for deceiving officials over its takeover of WhatsApp.

Antitrust officials are currently investigating Comcast’s (CCV) Universal Studios and Nike over allegations that they have been restricting how traders can sell licensed merchandise.

Apple is another US company that is in European hot soup, the EU is demanding that it should pay the Irish government $14.7 billion (€13 billion) in back taxes.

Vestager was quick state an analysis of investigations in her department has revealed that there is no anti-American bias.

Issues related to tax and competition have brought American firms operating in Europe under increased scrutiny and it remains to be seen how things will turn out moving into the future.