Alphabet : Corporate News Blog - Google's Comparison Shopping Service under Scrutiny; Faces $2.7 Billion Fine from the European Antitrust Commission

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The Case

In 2004, Google entered the separate market of comparison shopping in Europe, where it launched a product, initially known as Froogle. The product was later renamed as "Google Product Search" in 2008, and eventually in 2013, the product was called "Google Shopping". Google Shopping allows consumers to compare products and prices online and find the best deal from different online retailers.

From 2008, owing to the number of established players in the market, Google began to implement in European markets a fundamental change in strategy to steer its comparison shopping service. The strategy relied primarily on Google's dominance in general internet search, rather than competition on the merits of comparing shopping markets. According to the EU antitrust regulation, Google has systematically given prominent placement to its own comparison shopping service. Also, Google demoted rival comparison shopping services in its search results, on the basis of Google's generic search algorithms. As a consequence, Google's comparison shopping service is much more visible to consumers in Google's search results, while the rival comparison shopping services are much less accessible.

The Probe

In November of 2009, Foundem, a UK price-comparison website, filed a complaint in Brussels over Google's search practices. Later in November 2010, EU regulators began a formal investigation into Google's search practices. Google then submitted proposals in 2013 to address concerns it favored under its own search services, struck restrictive deals with advertisers, and copied content from rival websites without permission.

Later, in February 2014, after further concessions by Google, Brussels announced a settlement. However, in April 2015, the EU announced formal charge against Google for the first time, accusing the search giant of skewing results to favor its shopping service. This ruling from the European Commission signifies a major outlook if Google, the Internet-gateway, harnessed its dominance in the markets, spanning from online ads to mobile-phone software as a medium to promote its own services, at the expense of its competitors.

A New Chapter

This ruling marks a new era into how tech-giants promote their services, and offer consumers their products. This fine could just be the first in a series of EU antitrust penalties for Google, which is fighting on at least two other fronts ? its Android mobile-phone software and the AdSense online advertising service.

Market Dominance by itself is not illegal under antitrust rules, but Companies with a market leading position have the liability not to abuse their position by restricting competition, be it in the market where they are dominant or in separate markets.

Google now has nine days to end the abuse or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet.

Last Close Stock Review

At the closing bell, on Wednesday, June 28, 2017, Alphabet's stock climbed 1.36%, ending the trading session at $961.01. A total volume of 2.74 million shares have exchanged hands, which was higher than the 3-month average volume of 1.65 million shares. The Company's stock price soared 13.08% in the last three months, 18.65% in the past six months, and 39.02% in the previous twelve months. Moreover, the stock surged 21.27% since the start of the year. The stock is trading at a PE ratio of 30.98 and currently has a market cap of $659.58 billion.

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