EU Fines Google Over Shopping-Feature

Post by Remco Livain
Jun
27
2017

The European Union and Google (Alphabet) have not been the best of friends so far. Today though, this latest EU-Commission ruling tops them all.

The EU-commission has said that Google is using its dominant role to promote its own products once more. This time Google’s retail marketplace Google Shopping is at the center of the discussion. The EU is criticizing that Google is putting Product Listing Ads (PLAs) above the regular search results.

The EU-commission argues that this placement cannot solely be used to promote products that are listed on Google (or service by Google). The placement should promote a wider diversity of product offerings.

The EU-commission has given Google 90 days to make appropriate changes. It is unclear though what these could or might be. If they do not adhere to the commission ruling a nice little fine of up to 5% of Google’s worldwide revenues (per day) is waiting for them.

Oh yeah and as a side-noted they have fined Google a whopping 2.4 billion Euros to go along with that.

 

What does that mean for us?

Quite frankly, we do not really know what that will mean for us – but this is a big deal. Alphabet is still contemplating whether or not they will appeal against the ruling. It is still unclear how they will react.

We think that Google will have a couple of different options:

  1. Google will need to remove the top-of-the-page placement
  2. They will need to add other PLAs to the top of the page as well (such as Amazon, Rakuten, Alibaba, etc)
  3. They might be able to move the PLAs down to a lower segment of the page
  4. Split the search results in half: show 50% organic results and 50% PLAs
  5. Or even remove the feature altogether

There are surely other possibilities, but they will have to get quite creative to tackle this issue.

 

Is Google Shopping that important?

Answering that question is quite simple: Yes it is very important. Not only to Google but also to retailers. Google Shopping is one of the top features that work so well for retailers. The price comparison tool opens up a whole new shopping window that is fully tailored to what the customer is searching for.

Product listing ads are highly effective because they are generally shown at the end of the purchase-decision-cycle. The customer has generally made up its mind already, knows what it wants and this feature presents them with the exact product they were looking for.

With the likes of marketplaces such as Amazon and Alibaba – your one-stop shops for basically anything on the web – it has become harder and harder for retailers to grab the attention of new users. A feature such as Google Shopping is an absolute blessing for them.

Performance-driven advertisers use this tool extensively. Next to that, industries such as Fashion & Clothing spend the majority of their marketing budgets on this feature. It would be a huge blow to Googles advertizing business, if they were forced to take this down.

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