Not on My Watch: EU Commission Punishes Google for €2.42 Billion

On June 26 (2017), news released from the European Commission headquarters in Brussels found technology giant Google being fined for a record €2.42 billion (approximately US$2.73 billion) primarily for “giving illegal advantage[s] to own comparison shopping service[s].” In a recent press release (issued on June 27), Commissioner Margrethe Vestager praised Google’s innovating products and how it impacts the lives of its consumers. However, this was before Google was accused of abusing its market dominance with its search engine to promote its very own shopping service, fostering “unhealthy” competition for its rivals. Vestager mentioned that the actions performed by Google during the last years, such as denying other companies the ability to compete on their merits and denying EU citizens a free choice of services, are considered illegal under EU antitrust regulations.

Truthfully, this case really did not need to go to court for people to notice that Google’s algorithm design favors its very own products and solutions—this comes as no surprise. All Google services are equipped with some of the most powerful algorithms in the technology industry, allowing machine learning (ML) algorithms to run their magic on every piece of data that falls in its interconnected web. From Google Maps to YouTube preferences, to search engine queries, and even personal emails, the company managed to create sophisticated models for its users. Byte by byte, Google’s data gathering endeavors and its prediction algorithms have been put to the test for online shopping.

However, the dark side of this “optimization” proceeded to filter offers and products by competitors, costing mid- and small-sized companies billions of dollars in unsold merchandise. To put matters into perspective, according to the Centre for Retail Research in Western Europe (covering France, the UK, Germany, Spain, Italy, the Netherlands, Belgium, Austria, Switzerland, Sweden, and Poland), e-commerce online sales is expected to reach US$293 billion in 2017. The fine imposed by the Commission accounts for 0.0093% of the total aforementioned EU revenue. 

The fine imposed on Google is based on antitrust regulations, namely Article 102 in the Treaty on the Functioning of the European Union, as well as Article 54 of the EEA Agreement, which prohibits the abuse of a dominant position. However, this isn’t the first time that the EU has come head-to-head with Google and other U.S. technology companies, and it will probably not be the last either. There have been other instances where the EU has clashed with Google over matters of data protection laws. Some of the most significant ones under this legislation have targeted Microsoft, Telefónica, Facebook, and Apple to name a few, with the total pool of imposed reaching US$9.54 billion for the period between 2013 and 2017.

Over the past few years, the EU has repeatedly laid the foundation for the protection, processing, and transition of personal data under its Directive 95/46/EC. The data protection regulations have also been reformed quite a few times in the past years, but the main principle of the current Data Protection Directive is to “give citizens back control over their personal data, and to simplify the regulatory environment for business,” and covers everything from online shopping to drone usage. Regarding the former, suffice it to say that giving back control to users over their own personal data is not something that most technology and Internet companies would agree to easily (even the data in a user profile in Facebook does not belong to the user in question).

As far as the latter is concerned, simplification of the regulatory environment is certainly something that most governments (and corporations) would strive toward—at least in theory. However, the fact of the matter is, data protection is often seen as a synonym to mandatory encryption practices, key and certification management, and additional server costs for isolated data storage, among other things, which are often judged “counter-productive” for some technology players.

The fine imposed by the EU Commission to Google hopes to send a message across other major technology vendors, as well, but what we are experiencing at the moment is a paradox. On the one hand, we see western technology players (Google, Microsoft, Apple, Facebook, and many others) writing strongly-worded letters to the NSA to cease its overt (and covert) actions, which includes siphoning data from their servers, installing backdoors in their products, and unwittingly involving them in their mass surveillance projects. The first wave began in mid-2013 with the PRISM letter, and rages on even now, with other companies (like Uber) joining the ranks. On the other hand, we see that some of these technology giants have still not come to terms with lawful conduct, fair competition, and data protection laws over their side of the equation. As ABI Research has predicted in the past, this paradoxical struggle will only get fiercer the closer we get to centralized storage of biometric credentials.