How Europe is forcing Google to change

Europe has gone after Google with tough new regulations, court battles and massive antitrust fines, forcing the company to change how it does business in the lucrative market.

The latest hit came Wednesday, when EU regulators fined Google €1.5 billion ($1.7 billion) for abusing its dominant position in online search advertising.

Google altered its search advertising practices in 2016 after EU regulators objected. It’s also changed how it displays shopping results, overhauled its privacy policy and relaxed its grip on the Android mobile market.

The tech giant said Tuesday it made many of the changes “in direct response to formal concerns raised by the European Commission.” Other shifts have been forced by court rulings and new EU data rules.

Google now looks very different, as a result.

Antitrust

Wednesday’s antitrust fine is the third against Google (GOOGL) in less than two years. The fines — the three largest of their kind against a single company -— total €8.2 billion ($9.3 billion). But the penalties are about more than money.

The Commission has ordered Google to change the way it pushes its apps on Android users, and how it uses its search engine to boost its shopping service.

Margrethe Vestager, Europe’s top antitrust official, said the changes are producing results.

Only 6% of clicks from Google’s shopping results went to competitors in July 2018, but that figure has increased to around 40%, she said.

Google can no longer force smartphone makers to install Google’s search and browser products if they use the Google Play Store. The company said this week it will now ask Android users which browser and search engine they prefer.

Privacy

Sweeping new privacy laws, the General Data Protection Regulation, came into effect in May 2018.

EU Commissioner of Competition Margrethe Vestager gives a joint press on Antitrust : Google online search advertising at the EU headquarters in Brussels on March 20, 2019. - The EU's powerful anti-trust regulator slapped tech giant Google with a new fine on March 20, 2019 over unfair competition, in Europe's latest salvo against Silicon Valley. (Photo by JOHN THYS / AFP) (Photo credit should read JOHN THYS/AFP/Getty Images)

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The law affects organizations that hold or use data on people inside the European Union. It gives people more control over their data and forces companies to make sure the way they collect, process and store data is safe.

Google has already got itself in trouble over the rules. France’s data privacy watchdog fined Google €50 million ($65 million) in January, the first major fine given under the new rules.

The regulator said Google didn’t provide users adequate information and failed to obtain their valid consent in regards to personalized advertisements. Google has appealed the decision.

Right to be forgotten

The European Court of Justice (ECJ) issued a landmark ruling in 2014 that search engines like Google must remove certain unwanted links upon request, establishing a legal precedent across the European Union.

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In a report on the issue published in February 2018, Google said it removed over 1 million results in the three years following the ruling. It said that 8% of the results were related to “crime” and 7% to “professional wrongdoing.”

The ECJ is currently deciding a separate case over whether the right to be forgotten should be extended globally -— something Google has been resisting.

Next battlegrounds: Copyright, illegal content, taxes

Google and other big tech companies are facing numerous other potential problems in Europe.

The most pressing: EU copyright law proposals that will be voted on by the European Parliament in the next few weeks. Google and others have been lobbying against the law, saying it could dramatically change the internet.

The main sticking point is whether content sharing platforms like YouTube, which is owned by Google, should be liable for copyright infringements committed by their users.

Another section of the proposal would require sites like Google News to pay publishers for displaying snippets of content. Google says that would prevent it from sending traffic to media sites.

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The European Union is also pushing tech companies to clean up their act when it comes to illegal content and hate speech, threatening to legislate new rules if voluntary arrangements don’t work.

Another issue is the digital services tax, which would require companies like Google to pay tax on sales in countries where they are made. An EU-wide proposal has been put on hold, but some countries are pressing ahead.

Break up?

The European Parliament has repeatedly voted to break up Google to weaken its dominance across the region. The votes are not binding, but they give a sense of sentiment towards the company in Europe.

Regulators have so far steered clear of the idea.

“For us, that would be a measure of very, very last resort,” Vestager told CNN on Wednesday. But she hinted that the next big antitrust fight could be about the huge amount of data held by tech companies.

“If you cannot get access [to the data], well, the number of competitors may dry out and the number of innovators may dry out as well,” she said.

Erin McLaughlin and James Frater contributed reporting.