EU planning to fine Google over its shopping tool

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The European Commission, the administrative arm of the European Union, is planning to impose a fine of €1 billion on Google over what it sees as monopolistic practices, according to a report on FT.com, which we’re getting from Business Insider

The Financial Times report says the EC has found the tech giant to be promoting its own shopping service over competitors’ in its search results.

The judgment apparently covers Google search on Android devices as well as general search on other devices.

The FT says the EC will make its decision public “in the coming weeks”.

European regulators have been locked in battle with US tech giants for quite some time. As well as Google, Apple has also caught flak from EU politicians who accuse large companies of cynically taking advantage of tax loopholes across the region.

Six months ago, EU Commissioner Margrethe Vestager said Apple – which is estimated to be the richest company in the world with a market capitalisation of more than $600 billion – had taken advantage of unfair tax breaks offered to the company by Ireland.

She said at the time that Apple owes $14 billion in unpaid taxes.

Vestager said: “Member States cannot give tax benefits to selected companies – this is illegal under EU state aid rules.

“The Commission’s investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years.

“In fact, this selective treatment allowed Apple to pay an effective corporate tax rate of 1 per cent on its European profits in 2003 down to 0.005 per cent in 2014.”

Apple CEO responded by saying the EU had dialled a “false number” and the accusations were “total political crap”.

The resulting decision was that Ireland was meant to collect the taxes from Apple, but it’s been taking its time doing so, according to reports in the media.

Google has not yet responded to the FT report, but has in the past defended itself, saying online shopping is “robustly competitive”.

In a blog post, Google’s senior vice president and general counsel, Kent Walker said that the EC had used an inappropriate measurement in its decision-making.

The Commission’s original statement of objections, said Walker, “drew such a narrow definition around online shopping services that it even excluded services like Amazon”.

He went on: “It claimed that when we offered improved shopping ads to our users and advertisers, we were ‘favouring” our own services – and that this was bad for a handful of price comparison aggregators who claimed to have lost clicks from Google.

“But it failed to take into account the competitive significance of companies like Amazon and the broader dynamics of online shopping.”

Google subsequently conducted its own tests and probably modified its system, as it has done on a routine basis over the past 10 years or more.

Walker said: “Our response demonstrated that online shopping is robustly competitive, with lots of evidence supporting the common-sense conclusion that Google and many other websites are chasing Amazon, by far the largest player on the field.”

He added: “There is simply no meaningful correlation between the evolution of our search services and the performance of price comparison sites.

“Meanwhile, over those same 10 years, a rapidly increasing amount of traffic flowed from our search pages to popular sites like Amazon and eBay as they expanded in Europe, hardly a sign of our ‘favouring’ our own ads.”