The ongoing battle between Google and the European Union reached its boiling point when the EU’s antitrust regulator handed the tech giant $2.7 billion in fines. Now, just weeks later, the EU is considering doing it again, and the fee is likely to be bigger.
For the search-engine-turned-monopoly, this could be the start of a regulation-fuelled catastrophe.
The EU’s seven-year Google investigation culminated with charges that Google has been favouring its own shopping service in search results over that of competitors. The EU is not alone in its scolding: Google competitors like Yelp, Oracle and Getty Images have joined forces and went so far as to sign a letter supporting the fine, claiming Google acts as an unfair gatekeeper by placing its own Shopping links above theirs.
Google, however, points fingers at Amazon and eBay to deflect such criticism, arguing that the EU’s focus is too narrow. This claim crumbles under analysis, as the EU has previously launched investigations into Apple and Amazon regarding both companies’ tax practices. Apple was forced to pay £11 billion in unpaid taxes to the Irish government, while Amazon finally (and reluctantly) agreed to stop funnelling sales revenue through its Luxembourg subsidiary.
Nonetheless, many use Google’s fine to connect the dots. To them it seems the EU is unethically targeting U.S. companies while ignoring the similar wrongdoings of European businesses. Regardless of who’s to blame, it’s becoming less about the fines and more about the repercussions. Google, Apple and Amazon are three of the five most valuable global brands, and if the EU continues to dish out billion-dollar fines, the whole market will be affected.
Implications for marketers across the globe
The European Commission has ordered Google to give “equal treatment to rival comparison shopping and its own service,” meaning Google must use the same algorithms to display competitors’ results.
If upheld, the EU’s fine will do more than chip at Google’s pedestal. For marketers, there will be more than just one option for ads, naturally leading to lower prices for consumers. Furthermore, Google would be forced to keep PPC and AdWords prices down to remain competitive, and the company would lose its role as gatekeeper.
Another possible remedy to Google’s wrongdoings is to establish a separate monitoring agency devoted to tracking the company’s activity in Europe. If this were to happen, Google could be forced to reveal its algorithms to regulators, rivals and maybe even the public. Such mandated transparency would not only allow Yahoo and Bing to start engineering comparable features, but would also provide digital marketers with the information needed to master Google’s algorithms and boost their own rankings.
At the very least, Google is likely to revert its European Shopping service to a previous version, which would push paid Shopping ads beneath organic search results. Why, then, would marketers pay for an ad spot when they could instead boost their page-rank and occupy an organic slot above its paid counterpart?
Most likely, they wouldn’t.
Regardless of the specific actions Google will take to satisfy EU demands, its methods for serving search results will teeter, as will its role in digital marketing. Furthermore, now that an entire continent is in active opposition of Google’s tactics, other tech firms and companies will be more likely to offer their own complaints against the tech giant.
The war between Europe and Silicon Valley is growing, and Google’s altercation with the EU is just one of its many battles. From tough new data-protection rules to multibillion-dollar antitrust fines, few are left unaffected. It’s not rocket science to notice the EU is sending a message: What may be “business as usual” in the US could be illegal across the pond.
By Michael Saba, content writer at CallRail
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