The European Union antitrust regulators are expected to hand Alphabet unit Google a whopping fine in the coming months. Google has been accused by the EU competition authority of distorting internet search results to favor its shopping service; harming their rivals and consumers.
The European Commission will make their decision after a seven year long investigation into the industry’s largest search engine; triggered by a large number of complaints from US and European rivals.
In the past Google has unsuccessfully attempted to settle cases with the previous Competition Commissioner Joaquin Almunia; her successor Margrethe Vestager has also shown no willingness to settle the current case.
Google has denied any wrongdoing in the past, and has rejected the charges brought forward; arguing that regulators ignored competition from online retailers Amazon and eBay Inc.
The investigation into Google revolves around allegations that the company knowingly manipulated consumers into purchasing their products over competitors. This was supposedly accomplished through selective showing of search results and the creation of deceptive reviews for promoting products from Google and sponsored outlets.
Google has also been accused of using its Android mobile operating system to get ahead of rivals, and blocking competitors in online search advertising related to its AdSense platform. The platform gives Google the ability to act as an intermediary for various websites.
Fines for companies who have been found guilty of breaching EU antitrust rules can reach 10 percent of their global turnover, and for Google that means up to $9 billion when looking at 2016 numbers.
Other than the fines, the European Commission is also expected to insure Google is to stop its alleged anticompetitive practices. For the time being it is not clean what measures the company will be expected to adopt in order to ensure rivals receive equal treatment in internet search results.
Despite the reports Google stocks managed to increase a small percentage and close at 996.12 yesterday. According to CFRA analyst Scott Kessler however, a lofty valuation and legal risks in Europe warrant taking the stock down a notch from ‘strong buy’ to ‘buy’. The stock has managed to rally nearly 26 percent so far this year. Kessler has said the stock is “attractively valued” but is not “compellingly prices”.
Even with the threat of fines looming overhead from the EU’s Commission, Googles parent company Alphabet is still in line in its race with Apple and Amazon to reach a $1 trillion market cap.
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