Google's $2.7 Billion Fine: Why It Might Do More Harm Than It Helps

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As you've probably read in a number of major news publications, Google was recently fined $2.7 billion for violating antitrust laws by European regulators. Margrethe Vestager, the European Union's competition commissioner, is spearheading this effort and is also well known for taking similar action against Apple over tax arrears owed to Ireland, the sum of which is s amounted to approximately $14.5 billion after assessing the interest fines. What happened with Google is significant, as the EU says Google is fax number database using its dominant market position as a search engine to suppress other retailers and comparison shopping sites. This is detrimental to competitors as it is obviously very effective and desirable real estate advertising. The EU argues that by limiting the visibility of Google's main search or comparison shopping competitors like Bing or Amazon, it limits competition. According to Vestager, this hurts the user experience and does the consumer a disservice by limiting their choices and ability to accurately compare and evaluate pricing options. Now, Google has 90 days to fix its algorithm to open up its shopping marketplace to competition or risk being penalized to pay 5% of its daily revenue until that happens.

Although the imposition of this fine demonstrates Google's monopoly in the market, does it really help the consumer as much as people think? Also, is it good or bad for advertisers who use Google as their primary channel? Although this fine is intended to open up competition in the market, two main consequences may arise that may not be beneficial for advertisers. Here are some of those shortcomings to keep in mind as we watch things unfold. Increased competition – beneficial or harmful? As Google advertisers well know, the fluctuation of CPC depends on different levels of competition. Due to real-time bidding, the greater the competition, the higher the CPC, and vice versa. The intent of this EU antitrust action is to increase competition in the fax number database marketplace by limiting Google's ability to crack down or fail to show results for other big vendors like Bing or Amazon. Makes sense, right? Related: Tactics to Increase the Lifetime Value of an Ecommerce Customer In fact, it has the potential to further stifle competition among smaller retailers in a big way. Companies like Bing or Amazon will not only dominate shopping results when comparing prices, which limits the visibility of other retailers, but they also possess immense buying power, allowing them to bid high on products. CPC at all levels. And since CPC is determined on an auction basis, advertisers are likely to see CPCs increase significantly. The more companies willing to pay $0.01 more than the competition, the higher the CPCs will increase. This poses a potential threat to small and medium e-retailers, who do not have this kind of financial resources or leverage. If they can't keep up with the rising CPC costs, their ad position will slip, decreasing their visibility and therefore their potential transaction volume and value.

If that happens, it becomes more difficult for that small retailer to reach a revenue threshold high enough to break even on their ad spend, which then makes Google a difficult channel to continue to invest in ad spend. If these small to medium sized retailers should act on this and pull out of Google due to lack of revenue, it will only leave the big players in the space who can afford it. In this case, increased competition actually harms the advertiser and provides even more limited price comparison options for the consumer, which is exactly what this EU action aims to alleviate. ecom marketing services How will this affect users' shopping experience? As mentioned, this antitrust action initiated by Vestager and the EU aims to increase users' shopping fax number database experiences by providing more visible options for price comparison and verification. That being said, another aspect of UX that is extremely important is user buyability. In this regard, allowing other comparison shopping sites, even Bing and Amazon, to participate in Google Shopping auctions adds a new layer of convolution to the online shopping process. Essentially, open auctions for Google shopping would allow other retailers and online marketplaces to display their ads for a product offer on Google shopping results. Some of these retailers and marketplaces, using Bing and Amazon as examples again, are 3 rd party marketplaces like Google. So, in effect, if a user feels compelled to click on an Amazon or Bing ad, they will be directed to an avenue that has a whole other layer of clicks that need to happen before payment.