EU fines Google $1 billion in first DMA penalty against company
The European Commission said Google favored its own search services and restricted app developers from steering users to outside offers.
By Maya Okafor · Markets Writer
· 3 min read
European regulators fined Google 890 million euros, or about $1 billion, after finding that the company broke the European Union’s Digital Markets Act. For investors, the decision adds a fresh regulatory cost and raises the pressure on one of Alphabet’s core businesses: search and the app ecosystem around Google Play.
The European Commission, the EU’s executive arm, said Google gave its own services better placement in search results than rival offerings. The Commission cited areas such as shopping and hotels, where it said Google’s services appeared more prominently while comparable third-party services did not receive the same visibility.
The penalty is Google’s first under the Digital Markets Act, according to CNBC. The DMA is the EU’s rulebook for large digital platforms that act as “gatekeepers,” meaning companies with enough market power to control how other businesses reach users online.
Alphabet shares were shown down 4.17% after hours on CNBC’s quote display for GOOGL.
What regulators said Google did wrong
The Commission said Google violated the DMA in two main ways. First, it found that Google treated its own services more favorably in search. That matters because search placement can influence which businesses users see first, and therefore where clicks, bookings and purchases go.
Second, regulators said Google failed to follow the DMA’s anti-steering rules. Anti-steering rules are meant to stop a platform from blocking businesses from telling customers about other ways to pay, subscribe or buy, including options that may be cheaper outside the platform.
Under the DMA, app developers that distribute apps through Google Play should be allowed to tell customers about alternative offers and direct them to those offers, including on websites outside Google Play, according to the Commission.
The Commission said Google did not meet that requirement. It said Google prevented app developers from freely communicating and promoting offers, and from completing contracts with users through distribution channels of the developers’ choice, including third-party app stores.
What the EU ordered Google to change
Along with the fine, the Commission ordered Google to treat rival services in search results in a fair and non-discriminatory way. In plain English, regulators want Google to stop giving its own services better placement just because Google owns them.
The Commission also said Google must allow app developers that use Google Play to promote offers and complete contracts with users both inside and outside the Google Play app store.
Google was not immediately available for comment when CNBC contacted the company.
The case shows how the EU is using the DMA to target business practices at the largest U.S. technology companies. For Google, the decision touches two areas that investors watch closely: how search results are displayed and how the company controls commerce around apps distributed through Google Play.
This story draws on original reporting from CNBC.
