What Steps Has Alphabet Taken with Its EU Fine?


Dec. 4 2020, Updated 10:53 a.m. ET

3Q17 earnings spared the impact of fine

The European Union (EZU) levied a record $2.7-billion antitrust fine against Alphabet’s (GOOGL) Google in June 2017, causing the company a serious profit hit in 2Q17. Alphabet reported net profits of $3.5 billion in 2Q17, down from $4.9 billion in 3Q16 due to the fine.

Alphabet’s 2Q17 EPS (earnings per share) also dropped to $5.01 from $7.00 one year previously, due to the impact of the fine. The company provisioned for the fine in 2Q17, so its 3Q17 results were not affected by it. Alphabet posted a net profit of $6.7 billion and EPS of $9.57 in 3Q17, with both metrics rising YoY (year-over-year).

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Google accuses EU regulator of misstating facts

As it had suggested it would do, Google appealed the EU fine in 3Q17. The US-based (SPY) Internet search giant filed its appeal in September to beat the deadline to file an appeal under EU law. A summary of Google’s appeal was published in the EU’s official journal in October and seen by the Wall Street Journal.

In the appeal, Google contested the fine on the grounds that the European Commission, the executive and antitrust arm of the EU, misstated facts. The company further argued that the regulator failed to show sufficient proof that its behavior hurt competitors.

Fine based on alleged abuse of market power

The EU fined Google for allegedly abusing its power as a dominant search engine provider. According to the EU regulator, Google used its market dominance to discriminate against rival comparison-shopping services in Internet search results.

But Google said in its appeal documents that the regulator failed to take account of competition it faces from e-commerce platforms such as Amazon.com (AMZN) and eBay (EBAY).


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