Internet Giant Google takes a record $3.57 billion fine
Large corporations have been known to tread the ‘grey’ area of the law, but when power blinds judgment, the justice system seems to always manage to get the better of them.
This is what happened yesterday when Google was fined a record of $3.57 billion by an EU competition regulator for breach of antitrust rules. To give some context, the original record for fines of this nature was $1.56 billion, awarded to Intel in 2009. The EU agency awarded the fine due to alleged attempts by Google to modify its search engine processes to provide illegal competitive advantages to its own products. In effect, Google products were placed first in searches while rival products would not appear until page 4 of searches. Firstly, this meant that consumers did not have a genuine range of options to choose from during shopping and secondly, this constituted anti-competitive conduct that is detrimental to the online shopping industry.
The fine devalued Google’s stock prices and this triggered a domino effect, causing other related major companies to drop in stock prices. The parent company, Alphabet lost up to $8.5 billion in value and various related stocks such as NASDAQ and Facebook fell in values of up to 1.61% and 5% respectively.
Financial losses aside, Google’s loss of reputation is arguably the most damaging for the corporation. Historically, many firms in similar positions have had themselves losing the best university talent to other competitors.
Context into the Competition Law
Antitrust law is basically another term for Competition Law. In Australia business competition is regulated by an independent body, the Australian Consumer and Competition Commission (ACCC) which operates under the Consumer and Competition Act 2010 (Cth).
In essence, the body promotes fair competition within Australian businesses and prevents any anti-competitive conduct – such as illegal monopolisation.
In this day and age, so much of our world’s progress stems from our prominent culture of innovation and that is partially a product of competition. It is only under the influence of competition that businesses are incentivised to embrace change, adapt to new processes and strive for innovation. Google’s attempt to transcend the Competition Laws and potentially monopolise the online-shopping industry goes against this very precept and thus has faced the punitive measures by the EU regulatory body.
As a concluding statement, it goes for all businesses that all conduct should be exercised with prudence to ensure that it conforms to Competition Laws and Regulations.
For more information about competition regulations and how it applies to your business, get in touch with an experienced Business Lawyer.
Let us know your thoughts on the Google incident by tagging us at #lawpath or @lawpath.
Tony is a legal Intern at Lawpath who is working with the contents team to provide legal insight for SMEs. With an interest in contract and business law he is currently completing his Finance and Law degree at the University of New South Wales.