Google Fined a Record $2.7 Billion in Europe
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UPDATED: Aug 20, 2017
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Google was fined a record $2.7 billion by European antitrust regulators who found that the company had unfairly favored some of its own services over those offered by rival companies.
The fine is more than twice as much as the highest previous European antitrust fine.
In 2015, Google was charged by the EU with unfairly diverting online traffic from competing businesses to its own comparison shopping site.
As reported by the New York Times, Google has $90 billion in annual revenues. It controls 90% of the market for online search in Europe.
The EU also investigated Google for antitrust violations involving its Android operating system and online advertising services.
Margrethe Vestager, the European Union’s antitrust chief, has also gone after Apple for $14.5 billion in back taxes in Ireland, investigated Amazon’s tax practices in the EU, and expressed concern about how Facebook collects and handles personal data in Europe.
As reported by another article in the Times, Google is expected to fight to protect its “crown jewel — its closely guarded search algorithm — from the prying eyes of regulators and, possibly, its competitors.”
Google is now required to change how it ranks search results to give its rivals — including both US and European companies — greater prominence, thus leveling the playing field.
Some experts and competitors claim that determining whether Google has actually complied with the EU order will require oversight of Google’s products — possibly putting its trade secrets at risk of exposure.
In the United States, unfair competition is governed by both state and federal law.
At the federal level, the main antitrust law is the Sherman Act, passed in 1890. The Sherman Act makes illegal “every contract, combination, or conspiracy in restraint of trade,” and any “monopolization, attempted monopolization, or conspiracy or combination to monopolize.”
As the Federal Trade Commission notes,
Long ago, the Supreme Court decided that the Sherman Act does not prohibit every restraint of trade, only those that are unreasonable. For instance, in some sense, an agreement between two individuals to form a partnership restrains trade, but may not do so unreasonably, and thus may be lawful under the antitrust laws. On the other hand, certain acts are considered so harmful to competition that they are almost always illegal. These include plain arrangements among competing individuals or businesses to fix prices, divide markets, or rig bids. These acts are “per se” violations of the Sherman Act; in other words, no defense or justification is allowed.
Penalties for violating the Sherman Act can be as high as $100 million for a corporation.
Another important federal law is the Clayton Act, which prohibits certain types of mergers and acquisitions, where those transactions substantially lessen competition or create a monopoly.
In the Internet age, US companies that do business around the world also need to be concerned about international antitrust law.
As the Google case shows, running afoul of foreign antitrust laws can be very expensive.