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How Will The £2.1bn Google Shopping Penalty Affect Your Business?

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Google ShoppingThe EU Competition Commission has fined Google 2.4bn euros, around £2.1bn, for abusing its position of power by showing its own Shopping service price comparison adverts at the top of the search page. This is the largest fine to be dealt to a tech company in Europe, and will no doubt turn attention to many of Google’s other products. Google has said that it is planning to appeal.

What Did Google Do Wrong?

The EU’s Competition Commission analysed 5.2 terabytes of search results, which is the equivalent of around two billion searches. It determined that Google had been “illegally” promoting its own Google Shopping results ahead of similar comparison results from online retailers. In recent years, we have seen how Google has encroached on the territory traditionally controlled by price comparison websites; it seems that Google has finally crossed the line.

Details of the EU Competition Commission decision can be found in the official factsheet – here’s our summary:

Google broke EU antitrust rules by using its market dominance to promote its own shopping comparison service. Google is the dominant search engine across the entire European Economic Area (EEA), which comprises of 31 countries, and it not only provides organic search results, but also gathers data on individuals to provide tailored results. It is argued that Google should not be taking an unfair advantage of its position to further increase sales across its own brands.

The European Commission explains: “Market dominance is, as such, not illegal under EU antitrust rules. However, dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets.“

Google initially launched its shopping platform as Froogle, and then rebranded to “Google Product Search” in 2008 and “Google Shopping” in 2013. Because Google places these results at the top of the search page, any products listed are automatically positioned above the organic listings from online retailers. While the giants such as Amazon, Argos, and Tesco can still rank easily, many smaller businesses are simply pushed out of the significant search results.

The European Commission also found evidence that some Google’s rivals had had their search positions demoted for a variety of reasons, suggesting that Google has been actively modifying its search algorithm to favour its own Shopping comparison service. It was noted that “even the most highly ranked rival comparison shopping service appears on average only on page four of Google’s search results, and others appear even further down”.

In the past, Googlers have said that Google does not wish rank competitor’s search engines, and why should they? The main argument is simply that if users wanted to use the other search and comparison engines, they would type these into the URL address bar, and not search Google.

The main objection though is not about the demotions and the position of the results, but the fact that Google has leveraged its search market dominance to drive searchers to its own comparison engine – Google essentially took advantage of a captive audience, which has resulted in fewer people visiting the sites that they actually intended to.

The rate of growth that Google Shopping experienced has been staggering – since launching, Google Shopping increased its traffic 45-fold in the United Kingdom, 35-fold in Germany, 29-fold in the Netherlands, 17-fold in Spain and 14-fold in Italy. At the same time, traffic to rival sites has plummeted.

90 Days To Update Its System

Google has been given 90 days to change the way it operates its Shopping results – if it fails to comply, it will have to pay a fine equivalent to 5% of its parent company Alphabet’s global daily turnover, on top of the fine that it has already been issued.

Principle of Equal Treatment

Google has been told that it must respect the principle of equal treatment in its search results pages, which means that Google Shopping must compete on a level playing field with other shopping comparison sites.

A Brand Disaster

Google has the funds to pay its record breaking fine, but its brand could well be seriously damaged by this news. Google has always said it is one of the “good guys” on the Internet – it’s code of conduct once simply read “Don’t Be Evil”. However, a 2.4bn euro fine is going to result in many corporations and public bodies questioning how ethical Google really is. Many webmasters have been speaking out against Google for decades, but their complaints have largely fallen on deaf ears; maybe now authorities will stand up and listen?

How Will It Affect You?

This could be great news for you, then again, it could spell disaster. If you have invested time in getting your products into the Google Shopping results, then all the gains from your hard work may soon evaporate, if the Google Shopping pages vanish from the first page. However, if you have never been in Google Shopping, then you may well get to finally taste the fruits of your SEO labour. Of course, Google’s algorithm may well place it’s shopping comparison engine above the others – maybe it really is the best one available to users?

If you have been affected by this story, leave a comment below to tell us how Google’s record breaking fine has impacted your business.

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