A Google logo displays on a smartphone screen and the European flag on a computer screen.
Nikolas Kokovlis | Nurphoto | Getty Images
European regulators have fined Google 890 million euros ($1 billion), alleging the company gives preferential treatment to its own services.
The fine is Google’s first under the European Union’s sweeping Digital Markets Act (DMA) which aims to scrutinize Big Tech’s operating practices in Europe.
Shares of Google-parent Alphabet were around 4% lower in premarket trading, but that primarily reflected investor unease over rising AI spending outlined in the company’s earnings report on Wednesday.
The European Commission, the EU’s executive arm, said it found that Google gives preferential treatment to its own services, such as shopping and hotels, over those of third parties in search.
Google displays its own services “more prominently in search results,” while similar third parties “do not have the same prominence,” the Commission said.
The U.S. tech giant is also in breach of so-called anti-steering measures. Under the regulation, app developers who distribute their product via Google Play should be able to inform customers of alternative, sometimes cheaper offers. Those developers should 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 failed to comply with that obligation.
“In particular, Google prevents app developers from freely communicating and promoting offers and concluding contracts with users in distribution channels of their choice, including third-party app stores,” the Commission said.
Kent Walker, president of global affairs at Google and Alphabet, said the DMA will ruin the product experience for users.
“This implementation of the DMA continues to break everyday products. To comply, we are having to strip away real-time Search features Europeans love — like instant pricing and direct availability for hotels, flights, and restaurants — and dismantle safety protections on Google Play,” Walker said in a statement.
“This isn’t fair competition; it’s product degradation driven by a small group of self-serving complainants, with European businesses and consumers taking the hit. Regulation should improve products, not make them worse.”
Google said it is reviewing the decision and evaluating whether to appeal.
EU orders Google changes
The regulator said it ordered Google to treat third-party services on search results in a “fair and non-discriminatory manner.” It also said that Google needs to allow app developers who distribute their apps via the Google Play Store to “promote offers and conclude contracts with users not only within but also outside the Google Play app store.”
The Commission said Google proposed and began testing changes to how it presents its own services on search. The regulator said it would monitor the implementation of this move, which constitutes “substantial progress towards compliance.”
Google has also rolled out changes related to its steering terms in its app store.
The tech giant has 60 days to comply with the Commission’s decision, or it could be fined up to 5% of its worldwide turnover.
Google argues these changes to search could degrade the experience for European users and potentially impact travel businesses that gain users and bookings via its search platform.
In relation to the app store, Google argues that sending users to third-party sites also brings security risks.
