The Google logo appears on the smartphone screen, and the European flag appears on the computer screen.
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European regulators imposed fines google The company claimed preferential treatment for its services and received 890 million euros ($1 billion).
The fine is Google’s first under the European Union’s comprehensive digital markets law, which aims to scrutinize the business practices of big tech companies in Europe.
Shares of Google’s parent company Alphabet fell about 4% in premarket trading, largely reflecting investor concerns about increased AI spending outlined in the company’s Wednesday earnings report.
The European Commission, the EU’s executive arm, announced that Google was found to favor its own services, such as shopping and hotels, over third-party services in search.
Google gives its own services “more prominence in search results,” but similar third parties “do not receive the same prominence,” the European Commission said.
The US tech giant is also violating so-called anti-steering measures. The regulation requires app developers who distribute products via Google Play to be able to notify customers of alternative, and possibly cheaper, offers. These developers need to be able to direct customers to those offers even if they are on external websites outside of the Google Play Store.
The commission said Google had not complied with its obligations.
“In particular, Google prevents app developers from freely communicating and promoting their offers and from entering into contracts with users in any distribution channel, including third-party app stores,” the European Commission said.
Kent Walker, global president of Google and Alphabet, said DMA would ruin the product experience for users.
“This DMA implementation continues to disrupt everyday products. To comply, we must strip away the real-time search capabilities that Europeans love, such as instant pricing and direct availability for hotels, flights, and restaurants, and eliminate safeguards in Google Play,” Walker said in a statement.
“This is not fair competition. It is a deterioration of products caused by a few selfish complainants, and European businesses and consumers are hurting. Regulation should make products better, not worse.”
Google said it was reviewing the decision and considering whether to appeal.
EU orders Google to change
The regulator said it had ordered Google to treat third-party services in its search results in a “fair and non-discriminatory manner.” Google also said it must allow app developers who distribute apps through the Google Play Store to “advertise offers and enter into agreements with users not only within the Google Play App Store, but also outside of the Google Play App Store.”
The committee said it has proposed and begun testing changes to the way Google displays its services in search. The regulator said it would monitor implementation of the move, which represents “significant progress towards compliance”.
Google also rolled out changes related to the app store’s terms of operation.
Tech giants must comply with the commission’s decision within 60 days or face fines of up to 5% of their global revenue.
The European Commission first proposed the Digital Markets Act at the end of 2020, and it could become formally enforceable in 2024. Under the law, major technology platforms such as Alphabet, Apple and Meta are designated as “gatekeepers,” meaning they are subject to additional provisions of the law.
Google argues that these changes to search could degrade the experience for European users and impact travel businesses that acquire users and bookings through its search platform.
Regarding app stores, Google claims that directing users to third-party sites also poses security risks.
Correction: This article has been revised to reflect that the European Union’s Digital Markets Act will become officially enforceable in 2024. Previous versions incorrectly stated the DMA timeline.
