The European Union has been investigating Google Inc. for antitrust breaches for several years, and today the European Commission slapped the search giant with a record $2.7 billion fine for engaging in anticompetitive behavior.

The European Commission concluded today that Google abused its dominant market position to promote Google Shopping, a comparison shopping search tool that allows users to see product prices across multiple online retailers. The Commission accused Google of giving its comparison shopping service more prominent placement in search results while at the same time demoting results for rival services.

The commission noted in a statement that while market dominance is not illegal in the EU, anticompetitive practices are, and the commission said that Google’s practices have contributed to a more than 80 percent drop in traffic to rival comparison shopping services.

“Google has come up with many innovative products and services that have made a difference to our lives. That’s a good thing,” EU Commissioner Margrethe Vestager said in a statement. “But Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals.”

Instead, she added, “Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors. What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation.”

In addition to the record breaking $2.7 billion fine, the commission has also ordered Google to “stop its illegal conduct” within 90 days. Otherwise, Google’s parent company, Alphabet Inc., could face fines of up to 5 percent of its average daily worldwide revenue until it complies.

Google ‘respectfully disagrees’

Although the European Commission has reached its final verdict against Google, the search giant has not given up its fight. Kent Walker, senior vice president and general counsel at Google, said in a statement that Google disagrees with the commission’s decision, and he argued that Google’s search practices are aimed at providing users with the best experience rather than pushing them to Google’s services.

“While some comparison shopping sites naturally want Google to show them more prominently, our data show that people usually prefer links that take them directly to the products they want, not to websites where they have to repeat their searches,” Walker said.

Walker argued that other services may have failed simply because they did not offer the same range of useful features as Google Shopping. He added that comparison shopping services that do offer better search features, such as Amazon.com Inc. and eBay Inc., have grown to be strong rivals to Google Shopping.

“Given the evidence, we respectfully disagree with the conclusions announced today,” Walker said. “We will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case.”

But for now, this is the biggest challenge yet for Google on the antitrust front, one that is getting the attention of investors. “Aside from issues in China, we’ve never been as concerned as we are following this ruling,” Macquarie Research analyst Ben Schachter wrote in a note to clients. “Our key concern here is not the fine (though investors know its impact), rather it is the idea that the European Commission’s ruling may severely limit Google’s ability to improve its products going forward (at least within the European Economic Area). This could potentially meaningfully impact Google’s competitive position and economic interests.”‌

Photo: Google