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24th Jun 2018

Google revamps shopping service to avoid new EU fine

  • (Photo: Michael McGimpsey)

Three months after it was fined €2.4 billion by the European Commission for abusing its position on its online shopping service, Google is changing its website to comply with the Commission's demands and avoid a new penalty.

On Thursday morning (28 September), the US company's shopping service will treat its own ads the same way as ads from external services.

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The change will apply in the 31 countries of the European Economic Area (EEA) - the EU-28, plus Norway, Iceland and Lichtenstein.

The Google Shopping service is to become an independent entity within Google, placing ads on behalf of merchants on the Google search results page.

Its ads will appear at the same place and under the same conditions, through a system of auction, as ads from external price comparison services.

In June, the Commission considered that Google was using its search engine to promote its online shopping service and demote those of competitors.

Ads for Google Shopping products were generally displayed on top or near the top of the search page, while ads from competitors where down on the page or on other pages.

The Commission gave Google 90 days to change its site and ensure equal treatment of all services, or face a penalty of up to 5 percent of its average global turnover.

It gave no guidelines and said that is was up to Google to come up with a solution based on the principle of equal treatment for all shopping services.

"We're implementing a remedy to comply with the European Commission's recent decision," Google said in a statement on Wednesday.

The firm added that Google Shopping "will compete on equal terms and will operate as if it were a separate business, participating in the auction in the same way as everyone else."

Google informed the Commission at the end of August about the changes and started to work with a dozen comparison services.

On Wednesday, EU competition commissioner Margrethe Vestager told reporters that she knew "part of what they [Google] will do", but insisted that the US giant would have to "show that they live up to the decision."

"I have learned not to let my happiness depend on site design," she quipped.

Monitoring

She said that the Commission will "actively monitor" implementation by Google of the Commission requirement.

Two consulting firms, KPMG and Mavens, will help the EU executive in monitoring Google's activities.

They are "knowledgeable when it comes to data, search and the details in that," Vestager explained.

Google will have to hand in reports every four months, with a first one due early next year.

The monitoring period has not been specified, but Google is required to provide periodic reports for the next five years.

It is understood that Google will have to show that it has created equitable opportunity for all services and that its Shopping entity is profitable while respecting the equal treatment principle.

"This will be watched with great interest also by market participants," Vestager noted.


She added that feedback from other firms will be taken "very seriously" in the Commission's assessment.

According to Reuters, the first reactions to Google's revamped service, earlier this month, were "overwhelmingly negative".

If the Commission considered that Google was not compliant, it could open a new action, and would have to present evidence.

The case on the firm's shopping service was first opened in April 2015.

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