U.S. Markets closed

Google's record-breaking fine 'is a reflection of the abuse' of the law, top European official says

Anita Balakrishnan

European regulators handed Alphabet (NASDAQ: GOOGL) a fine of 2.4 billion euros (about $2.7 billion), the record-breaking result of a seven-year-long investigation into Google's shopping and search practices.

And one top European official said that the rare, massive fine is commensurate with the unprecedented degree to which Google has abused the law.

"The fine is a reflection of the abuse and how long the abuse has taken place," Margrethe Vestager, the European Commission's commissioner in charge of competition policy, told CNBC's " Squawk on the Street " on Tuesday. "And, of course, the importance of the different actors in this market. We find that this abuse has taken place since 2008, but also that it has taken place in every European country where Google Shopping has rolled out.... and that's reflected in the level of the fine."

The EU said that Google abused its market dominance by promoting its shopping service in search results, while demoting competitors' products. Some American companies agree: Yelp, Oracle and News Corp are among companies that signed a letter in support of the European Commission's decision.

Vestager said that while Google Shopping may seem like it has competition from companies like Amazon (NASDAQ: AMZN), the European Commission's analysis shows otherwise.

"What we find is these are two different things," Vestager said. "On Amazon, you find retailers that want Amazon to do part of their services. Those, you don't find to the same degree on Google Shopping. On Google Shopping, you find sort of the bigger brands, those who want to have the customer relationship themselves — the data, the payment details, the search patterns. These are two different things. We've been very thorough in assessing this to make sure we don't mix up markets."

But Google, which makes most of its money from search advertising, said it will consider appealing the fine . Google general counsel Kent Walker said in a statement that Google's shopping search results are relevant to users.

"Advertising is a completely different matter," Vestager said. "You find rivals on page 4, on average, on a desktop. You always find the Google Shopping unit right in front of you, where we know that most clicks can take place."

Google's supporters argue that punishing Google's popularity will chill innovation, especially if Google must appease regulators by suppressing future features that would otherwise help consumers.

"The EU has effectively decided that some companies have become too big to innovate," Robert Atkinson, president of a think tank called The Information Technology and Innovation Foundation, said in a statement. "The EU's actions have created a cloud of uncertainty that will make large tech companies overly cautious about making changes to the user experience and service offerings that would benefit consumers."

But Vestager said "there's not room for bias of any kind" in the targeting of U.S. technology companies by European regulators.

"This is a union based on the rule of law, just as well of the U.S.," Vestager said.

— CNBC's Karen Gilchrist contributed to this report.

More From CNBC