E.U. fines Google $1 billion under Digital Markets Act

The European Commission fined Google €890 million ($1 billion) on Thursday for breaching the European Union's Digital Markets Act, finding that Alphabet's search unit gave preferential treatment to its own services and blocked app developers from steering users toward cheaper alternatives.

The Commission issued two separate fines: €460 million for Google's self-preferencing in search results and €430 million for restricting how app developers direct users to offers outside Google Play. Under the DMA, gatekeepers must not treat their own services more favorably in rankings than third-party services, and app developers must be able to inform users of alternative purchase channels free of charge.

Regulators found that Google elevates its own services — among them shopping, hotels, transport, and sports results — above competing offerings, positioning them at the top of the page and presenting them with richer visuals and filtering tools that third-party services are not afforded. On the app store side, the Commission found that the fees Google charged for steering-related activity and the length of those charging periods went beyond what the DMA permits.

Google must bring itself into compliance within 60 days, after which the Commission could impose penalties reaching 5% of the company's global annual turnover. Regulators acknowledged that Google had initiated testing of new approaches to how its own services appear in search, and had introduced modifications to its app store steering terms — steps the Commission characterized as meaningful movement toward meeting its obligations.

Kent Walker, Google's president of global affairs at Alphabet, criticized the decisions. "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," Walker said in a statement. Google said it is reviewing the decisions and evaluating whether to appeal.

E.U. antitrust chief Teresa Ribera defended the fines. "The best products should succeed because they're better, not because they're owned by the company running the search engine," she said in a statement. E.U. tech chief Henna Virkkunen said the decisions aim to ensure "a fair and level playing field."

While Thursday's fines mark Google's debut penalties under the DMA, they represent the fifth and sixth times the company has been sanctioned for anti-competitive conduct in Europe, according to Reuters. Google lost its final appeal against a separate €4.1 billion EU antitrust fine related to Android, with the European Court of Justice dismissing that challenge earlier this month. A Swedish court ordered Google to pay roughly €1.7 billion in damages to Klarna's price-comparison unit PriceRunner over similar search self-preferencing conduct.

Alphabet shares fell roughly 4% in premarket trading on Thursday, a decline that analysts attributed mainly to investor reaction to the AI expenditure figures the company disclosed in its Wednesday earnings report, according to CNBC.