Google risks facing a hefty EU penalty after its proposal pitch failed

Google is at risk of steep EU fines after failing to agree with travel industry stakeholders like Skyscanner and other search services on how it presents search results. 

For some time, the tech giant has accrued several critics and company complaints over its supposed market monopolization. Travel companies like Skyscanner, Booking.com, and Kelkoo have accused Google of prioritizing its offerings, such as Google Flights, Hotels, and Shopping, in search results.

At a European workshop on July 7-8, Google sought to settle its grievances, presenting its proposals to the companies in attendance. However, the firm’s efforts fell short of reassuring its competitors.

Google’s critics and competitors are not satisfied with its proposals

Google suggested two alternatives that would place a dedicated section for vertical search services like Skyscanner and Kelkoo at the top of its results pages. At the same time, hotels, restaurants, and airlines appear below. However, competitors rejected the options, arguing that Google’s revisions will not level the playing field.

Skyscanner CEO Bryan Batista even believes the proposed layouts could mislead users and further entrench Google’s dominance in search rankings, adding that the  “box” solution ghettoizes them.

Other critics have also argued that the new designs for rivals’ boxes lack core functionalities such as real-time price updates, while most airlines are dissatisfied with their listing below third-party booking sites.

Moreover, lawyer Thomas Hoppner, the complainants’ legal counsel, claimed Google is deflecting scrutiny from its own regulatory violations by amplifying disputes between hotels and online booking services.

He commented, “Google is shifting the focus to alleged tensions between direct suppliers and intermediaries, diverting attention from the root issue: its own non-compliance, which created these tensions in the first place.”

However, Oliver Bethell, the lead in Google’s legal team, claimed that competing interests pulled them in different directions. He argues that any path forward must strike a balance for all European consumers, not just certain corporate players.

Google could face fines of up to 10% of its global revenue

In March, the European Commission issued two preliminary findings to Alphabet, citing non-compliance with the Digital Markets Act. Per its findings, the commission found certain features and functionalities of Google Search favor Alphabet’s offerings at the expense of its competitors.

They also found Google Play to violate the DMA, noting that app developers are restricted from directing users to other channels with better deals.

With Google’s proposals on the table, the European Commission is expected to decide on their compliance with DMA in the next few months. The company would be obliged to pay its first DMA penalty if it finds the changes lacking. If a fine is imposed, it could surpass the Android antitrust fine. Based on last year’s earnings, Google is looking at fines of up to 10% of its global revenue, roughly $30.7 billion.

In 2018, the EU imposed a €4.34 billion fine, almost $5 billion, on Google for violating antitrust laws. The agency argued that Google had placed illegal restrictions on Android device makers and mobile carriers for years, to reinforce its dominance in general internet search. It added that Google practices hindered competitiveness and stifled innovation, denying European consumers the benefits.

Before the penalty, Google required manufacturers to install its search and browser apps as a prerequisite for licensing its Google Play Store. It also paid manufacturers to pre-install the Google Search app exclusively on their devices and blocked its rivals.

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