Google's Record Fine of $2.8 Billion Was a `Deterrent,' EU Says

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Google headquarters in London King's Cross
Google headquarters in London King's Cross  Credit: _ultraforma_/iStock

The European Union aimed for a "deterrent effect" on Google and other technology giants when it ordered the internet search provider to pay 2.4 billion euros ($2.8 billion) for breaching antitrust law over how it displays shopping ads.

Regulators weighed "the need to ensure that the fine has a sufficiently deterrent effect not only on Google and Alphabet but also on undertakings of a similar size and with similar resources," the European Commission said in a 215-page document laying out details of its seven-year investigation into the company. The "particularly large" revenue of Google's parent, Alphabet, also determined the size of the fine, the EU said.

The penalty, levied in June, was more than double an earlier 1 billion-euro fine on Intel and came with a threat of more daily fines for Google if it didn't comply with an order to offer equal treatment to rival shopping-comparison services. Big numbers for big technology names have been a theme for EU Competition Commissioner Margrethe Vestager, who ordered Apple to pay back some 13 billion euros in taxes last year.

"It is very surprising to speak of deterrence when the behavior is novel, as in the Google case," said Dirk Auer, a research fellow at Liege University's Competition and Innovation Institute. "Large fines can only have a deterrent effect if firms know that their behavior might infringe the law. Here, the behavior is not listed" in the EU's enforcement priority and "Google is challenging this very point" in its court appeal.

-- Bloomberg News

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