Google has been hit with a record fine of 2.42 billion euros (£2.1bn; $2.7bn) by the EU’s European Commission, after it was ruled that the search engine giant had illegally promoted its own shopping comparison service in searches.
The landmark ruling is set to dramatically change Google’s operations in the EU, with antitrust regulators now looking to loosen the company’s grip on the online marketplace. With that being said, here’s what the Google EU fine will mean for the future of online shopping:
Changes to Google search
Google has a 90-day period in which it must make the necessary changes to operate within the boundaries set by the European Commission, otherwise it will be hit with further fines. This means that the search engine is set to look different in Europe (though will remain the same in other countries), with changes likely set to be made to its Google Shopping service in order to comply with the EU’s ruling.
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Currently, searching for an item on Google will typically display sponsored products at the top of the page, while other comparison sites and pushed further down the page. For example, this is what Google comes up with if you search for suits:
The EU determined that prioritising these paid ads was a willful abuse of Google’s dominance over the market, and that this should be altered in the future. In order to meet the EU’s expectations, Google would therefore need to refrain from pushing its Google Shopping ads ahead of its competition, which would effectively mean that it would no longer be given prominence at the top of a search result page.
Previously, Google had displayed paid search results to the right of a page, but it has steadily transitioned to making them more prominent. The EU ruling will likely mean that Google will be forced to make its Google Shopping service less visible, perhaps once again relegating it to its own space on search pages, or even to its own page.
Impact on smaller merchants
Though Google undoubtedly benefited from the prominence of its Google Shopping service in search results, limiting its prominence could well have a major impact upon smaller merchants.
Google outlined this in a blog post, with SVP Kyle Walker writing:
“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.
When the Commission asks why some comparison websites have not done as well as others, we think it should consider the many sites that have grown in this period–including platforms like Amazon and eBay. With its comparison tools, reviews, millions of retailers, and vast range of products from sneakers to groceries, Amazon is a formidable competitor and has become the first port of call for product searches. And as Amazon has grown, it’s natural that some comparison services have proven less popular than others. We compete with Amazon and other sites for shopping-related searches by showing ever more useful product information.”
There are now concerns that with these paid ads being rendered less useful, sites such as Amazon and eBay will overshadow these smaller merchants and potentially make the online marketplace less competitive in the process.
Shopping comparison sites will benefit
Google will now be forced to rank other shopping comparison sites higher on search results pages, as Google Shopping will be positioned in a less valuable spot. Not only that, but Google can now be sued for damages by these comparison sites in courts, with three cases in Europe already having been made. It is also expected that Google will be open to investigation in other types of search, including travel services and local information.
Google could also lose out on valuable ad revenue as a result of the changes. With paid ads now potentially being moved to a less lucrative area on search results pages, companies will inevitably not want to spend as much money in order to be featured on the search engine, which will in turn harm Google’s bottom line.
Featured Image Credit: Sean Gallup / Getty Images
Paul Tamburro is Crave’s UK, Tech and Gaming Editor. Follow him on Twitter @PaulTamburro.
