In the latest clash between European Union regulators and American corporations, Alphabet Inc.’s (NASDAQ:GOOGC) Google was hit with a $2.7 billion fine for illegally favoring its own shopping service when European shoppers searched for products online.
“What Google has done is illegal under E.U. antitrust rules,” said E.U. competition chief Margrethe Vestager. Google, not surprisingly, said it had done nothing wrong.
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Part Of A Pattern
The fine is only the latest in a series led by Vestager who is known to be an aggressive regulator. Last year she said Apple Inc. (NASDAQ:AAPLB) owed $14.5 billion in back taxes after striking a deal with the Irish government that let the company underpay taxes for more than 10 years.
As recently as last month the EU announced that ride-hailing service, Uber should be classified as a taxi company and not a tech firm.
All told, between 2013 and 2017, the European Union Commission imposed fines totaling 8.472 billion euros ($9.54 billion) between 2013 and 2017. The commission is no “Johnny come lately” to imposing fines.
Last year MAN, Volvo/Renault, Daimler, Iveco, and DAF were fined almost 3 billion euros for colluding on truck prices. In 2008 a number of car glass producers were fined for illegal market sharing and exchanging commercially sensitive information.
A year later in 2009 Intel Corp. INTC was fined more than a billion euros for “abusing its market dominance on central processing units (CPUs).” Intel followed Microsoft Corp. (NASDAQ:MSFTB) which has been in trouble with the EU on several occasions. Among Microsoft’s problems, a 900 million euro fine for charging "unreasonable" royalty fees between 2004 and 2007. Others fined in recent years include Telefonica (151 million euros) and Facebook Inc. (NASDAQ:FBF) (110 million euros).
Will It Matter?
According to Elevation Partners co-founder, Roger McNamee the answer is, “No.” McNamee says Google shareholders will look at the recent fine, massive as it is and say, “We won again.” That’s because companies like Alphabet, Facebook and fellow titan, Amazon.com Inc. (NASDAQ:AMZND) are “super monopolies” according to McNamee. The market share they have is on the same scale as that of Standard Oil a century ago, he said. Fines like the one levied against Google are simply not high enough to change behavior according to McNamee.
Meanwhile, after announcing it now has 2 billion monthly users – roughly 25% of Earth’s population – Facebook has other things on its mind besides the European Union. “We’re getting to a size where it’s worth really taking a careful look at what are all the things that we can do to make social media the most positive force for good possible,” said Facebook Chief Product Officer Chris Cox said recently.