Google Shopping, formerly known as both Froogle and Google Product Search, allows consumers to search for products and compare prices through Google's search function. The adverts can appear in Google's search results and the 'Shopping' tab.
Google Shopping is powered by two platforms. The first is Google Adwords, a service focussed largely on keywords, which allows businesses to set a budget for advertising and manage their bids. The second is the Google Merchant Centre where product data is uploaded and stored to create a product feed. Products to appear in the feed are assigned certain attributes which assist in determining whether they will show up in the search results. Businesses are then able to create Shopping Campaigns.
Google Shopping is a paid service which works on a cost per click model. The service was free but moved to a paid model in 2012. The links at the top right hand side of Google search are paid clicks but clicks from the Google Shopping tab are free. Business' only pay when people click their ads but they must have a budget set for their products to appear. Google determines when product listing ads show up based on a business' product feed and bid amounts paid. Therefore, the more a business bids, the more likely its products will rank higher.
Google were accused of abusing their dominant position by promoting its own comparison shopping service over its competitors. This is illegal under EU antitrust rules and deemed anti-competitive denying other companies the chance to innovate and consumers a genuine choice of services. The investigation by the EU's politically independent executive arm, the European Commission, lasted 7 years.
The big EU fine
The commission fined Google $2.7billion in June 2017. This is a record breaking fine at approximately double the previous largest fine issued by the commission. Google have also been ordered to change the way it displays search results within 90 days. If Google do not end the misconduct within 90 days then they will face additional fines of up to 5% of the average daily worldwide turnover of Alphabet (Google's parent company) each day that it is still in breach.
What this means
Google are considering appealing the decision. They state that online shopping is more competitive than ever and they simply give the consumer what they are looking for in "fast and easy connections".
In the meantime the decision potentially opens the gates for claims from competitors and possibly even consumers who claim they have suffered as a result of Google's behaviour. Kelkoo claims to have lost 10 years of development and growth. The challenge for consumers is differentiating between paid search results and organic (free) search results.
America have a much more laid back attitude but regulators in America and around the world will be taking note of the European decision, albeit not binding on them. Other US tech giants will also be considering that they may face similar action.