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May 16, 2016
The European Commission’s seven-year investigation into Google Search is set to conclude within weeks, according to a Telegraph report, with a massive fine.
Citing ‘sources close to the situation’, the Telegraph reckons the EC wants to make an example of Google, not just for alleged monopolistic behaviour, but for the way in which it thinks Google attempted to impede the investigation.
The EC has the power to impose a maximum fine of 10% of the offending company’s annual revenue. Google brought in $74.5 billion in 2015 which, in today’s money, equates to €65.5, so the fine could be as large as €6.6 billion but is more likely to be around €3 billion ($3.4 billion), according to the Telegraph’s sources. Google’s net income in Q4 2015 alone was almost $5 billion so it could swallow such a fine without breaking stride.
Just as with big fines imposed by the EC on Microsoft in 2008 and on Intel in 2009 the broader implications, apart from shareholders getting a smaller dividend for one quarter, lie in how Google will be compelled to adjust the way it goes about things to avoid further EC aggro. Google will need to demonstrate that its algorithm doesn’t favour certain results, especially when it comes to shopping.
The other knock-on effect could concern the newly-opened EC investigation into Android, which alleges that Google uses the dominant market share of Android to squeeze out competition in mobile search. On top of that Bloomberg reports today that a new investigation into AdWords, the service that allows sponsorship of search keywords and is one of Google’s biggest sources of revenue, is being contemplated. At the very least a big fine might make Google rethink its strategy when dealing with the EC and be more inclined to make bigger concessions sooner.
As the Editorial Director of Telecoms.com, Scott oversees all editorial activity on the site and also manages the Telecoms.com Intelligence arm, which focuses on analysis and bespoke content.
Scott has been covering the mobile phone and broader technology industries for over ten years. Prior to Telecoms.com Scott was the primary smartphone specialist at industry analyst Strategy Analytics’. Before that Scott was a technology journalist, covering the PC and telecoms sectors from a business perspective.
Follow him @scottbicheno
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