Why Was Google Fined $2.7 Billion?

Google befell the ire of European Union officials this week and was fined a record $2.71 billion ( €2.42 billion) Tuesday. The fine was levied against Google for unfairly favoring some of its own shopping services over competitors.

Officials at the European Commission said that Google must come up with changes to its practices within 90 days or face more penalties.

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“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,” said Margrethe Vestager, the E.U.’s top antitrust official to CNN Tuesday. “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.”

Google wrote in a statement that it feels its service is helpful to customers and is only doing its best to compete with companies like Amazon.

“Given the evidence, we respectfully disagree with the conclusions announced today. We will review the Commission’s decision in detail as we consider an appeal, and we look forward to continuing to make our case,” read a statement from Google’s Senior Vice President and General Counsel Kent. Walker. “We think our current shopping results are useful and are a much-improved version of the text-only ads we showed a decade ago. Showing ads that include pictures, ratings, and prices benefits us, our advertisers, and most of all, our users. And we show them only when your feedback tells us they are relevant. Thousands of European merchants use these ads to compete with larger companies like Amazon and eBay.”

The Commission alleges that when someone types an item into Google, advertisements pop up first, which Google gets paid for when people click on the ads. Competitor price comparison sites appear lower in searches. According to the Wall Street Journal Tuesday the practice Google uses drops competitors traffic 85 percent in the U.K. and 92 percent in Germany.

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The fine is just more than double the previous largest fine. In 2009 the E.U. levied a $1.2 billion against Intel for a monopoly abuse case.

The fine is small in comparison to Google’s over $90 billion in annual revenues but is part of a chain of decisions that show the E.U. wants to keep a close regulatory watch on American tech companies that dominate European the market. Vestager demanded that Apple pay back $14.7 billion in back taxes to the government of Ireland last year and Facebook was fined this year for misleading officials when it purchased WhatsApp.