Google fined $1B under EU's landmark Big Tech rules

The European Commission has fined Alphabet's (GOOG) (GOOGL) Google a total of €890M (about $1B) under the EU's landmark Digital Markets Act, or DMA.

The regulator said it took two decisions finding non-compliance by Google with the DMA for self-preferencing its own services on Google Search and for putting in place restrictions on businesses to direct consumers to alternative, often cheaper, purchase channels on Google Play (steering). The Commission issued Google a fine of €460M and €430M, respectively. 

“This implementation of the DMA continues to break everyday products. To comply, we are having to strip away real-time Search features Europeans love - like instant pricing and direct availability for hotels, flights, and restaurants - and dismantle safety protections on Google Play. This isn't fair competition; it's product degradation driven by a small group of self-serving complainants, with European businesses and consumers taking the hit. Regulation should improve products, not make them worse," said Kent Walker, President of Global Affairs, Google & Alphabet, in an emailed statement to Seeking Alpha.

Google did not immediately respond to Seeking Alpha's request for comment.

Google — and other tech giants — were designated as a gatekeeper in September 2023 for its online search engine Google Search. In March 2024, the Commission opened non-compliance probes into Google's measures to prevent self-preferencing and steering rules. Last year in March, the regulator informed Google of its preliminary view that the company was in breach of the DMA.

The Commission said it found that Google gives preferential treatment to its own services, including shopping, hotels, transport, and sports results, over those of third parties in Google Search, thereby breaching DMA.

In addition, the regulator noted that under the DMA, app developers that distribute their apps via Google Play should be able to inform customers — free of charge — of alternative, often cheaper, offers and to direct them to those offers to make purchases. The Commission found that Google failed to comply with that obligation.

"Google has fallen short of effective compliance with the Digital Markets Act, and today we have taken decisive yet balanced enforcement action sanctioning these breaches. The best products should succeed because they're better, not because they're owned by the company running the search engine. And European consumers have a right to be told by app developers where to sign up to the best offers, even when the app store owner does not get a cut," said Teresa Ribera, executive vice-president for Clean, Just and Competitive Transition, European Commission.

The regulator said that Google must implement measures to: treat third-party services that feature on Google's search results in a fair and non-discriminatory manner by reference to its own services; and Allow app developers distributing their apps via the Google Play Store to freely communicate, promote offers and conclude contracts with users not only within but also outside the Google Play app store.

The Commission noted that, after a discussion, Google has proposed and started testing changes to how it presents its own services on Google Search for free services such as shopping, hotels, and flights. The Commission will monitor the implementation of these solutions.

In addition, the regulator said that Google has rolled out changes related to its steering terms.

Google is required to comply with the Commission's decisions within 60 days, or it risks periodic penalty payments of up to 5% of its total worldwide turnover, the Commission added. 

Shares of Google fell about 4% premarket on Thursday after tepid capex and a miss on operating margin overshadowed a top- and bottom-line beat for the second quarter.