Google hit with $1 billion EU fine, in 'constructive' talks to avoid more penalties

By Foo Yun Chee

BRUSSELS, July 23 (Reuters) - Alphabet's Google was fined a total of €890 million ($1 billion) on Thursday for flouting European Union rules aimed at reining in the power of Big Tech, the European Commission said.

However, the tech giant is likely to avoid fresh fines as EU regulators lauded good progress in its efforts to comply with the landmark legislation.

The fines underscored Europe's determination to prevent Big Tech companies from thwarting rivals, defying U.S. criticism and retaliatory tariff threats.

One fine of €460 million was handed out under the Digital Markets Act for favouring its own services in shopping, hotels, transport and sports results in search results.

A second fine of €430 million targeted Google's restrictions on its app store Google Play preventing app developers from steering users free of charge to cheaper offers on rival app stores or websites.

Reuters was the first to report on both fines, which are the first for Google under the DMA but the fifth and sixth overall for anti-competitive practices, making for total penalties of €10.38 billion over nearly two decades.

"Our duty and obligation is to comply with the laws, that our laws are fully respected," EU antitrust chief Teresa Ribera told reporters when asked about U.S. pushback.

"The DMA is to make sure we have a fair and level playing field. With these decisions we want to make sure there is competition," EU tech chief Henna Virkkunen told reporters.

Google, which has 60 days to comply with the Commission's orders to treat rivals in a fair and non-discriminatory manner and to allow app developers to steer users away from its app store, criticised the EU findings and said it might take the Commission to court.

"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," Google President of Global Affairs Kent Walker said in a statement.

"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."

MORE FINES UNLIKELY GIVEN 'CONSTRUCTIVE DIALOGUE'

The crackdown on Big Tech has angered the Trump administration, which has threatened to retaliate with tariffs for what he said are moves targeting U.S. companies.

U.S. Trade Representative Jamieson Greer said the fine and other EU actions "are driving massive uncertainty for U.S. exports of goods and services to Europe."

Greer said in a statement noting a recent record loan to Airbus from the EU lending arm: "It becomes clear that the EU continues to target the most competitive U.S. companies." He did not mention any U.S. plans to retaliate.

The commission, which acts as the EU competition enforcer, pointed to a "constructive dialogue" with Google and significant progress made to comply with the DMA, indicating that daily penalties for non-compliance are likely off the table.

"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 said, calling it substantial progress.

"The Commission also notes that Google has proposed and started testing changes to how it presents shopping ads and content related services, such as sports," it said.

The EU watchdog also said Google may apply the principles of Thursday's decision to its AI-generated summaries known as AI Overviews and AI Mode and that talks would continue to this end.

Google's changes to its steering terms on Google Play received a tentative thumbs up from the commission.

"These constitute good progress towards compliance and will also be assessed in light of the cease and desist order of today's decision," it said.

The fines are the third under the DMA after penalties handed out to Apple and Meta Platforms in April last year.

($1 = 0.8763 euros)

(Additional reporting by David Ljunggren in Ottawa; Editing by Tomasz Janowski and Nick Zieminski)