Our CEO Sam Cinquegrani was quoted in this article on the fine over Google’s alleged manipulation.
Article by Kali Hays originally published in WWD
Online powerhouse Google is expected to absorb a massive 2.4 billion euro fine from the European Commission and keep on rolling, although it will have to leave behind its allegedly anticompetitive practices.
The fine — the largest antitrust levy in the European Commission’s history — comes after an exhaustive seven-year investigation finding that Google rigged search results to favor its own shopping platform.
Although shares of Google’s parent company Alphabet Inc. fell 2.6 percent to $927.33, the tech giant is still near its all-time high of $1,004, set earlier this month.
While Wall Street reacted to the commission’s decision, the pullback certainly was less dramatic than the punishment. The stock is still 6 percent higher than it was just two months ago.
So far, Google hasn’t had to change its search algorithm, but now is going to have to make some kind of move.
Morgan Stanley analyst Brian Nowak wondered about the “potential long-term changes in Google’s algorithm, search results and ability to monetize its most valuable search-result real estate with new ad products,” and said the company might simply innovate “its way through” the commission’s decision with new ad formats and pricing.
“If this happens, the performance of new ads versus shopping ads (which we believe have been performing well for advertisers) and alternatives (where else can retailers spend to reach consumers with as much intent as on search) will be important to monitor,” Nowak said.
Sam Cinquegrani, founder and chief executive officer of ObjectWave Corp., a digital marketing and tech services company, said Google would figure out the situation in Europe, one way or another.
“Google is an innovator,” Cinquegrani said. “It’s one of those companies that, I’m sure, will comply with the decision, but they’ll find a way around this, or they may simply pull out of Europe. But who loses in that scenario? The European consumer.”
Cinquegrani added that Europe’s antitrust commissioner Margrethe Vestager has a history of “going after tech companies” and that he’s not sure the commission’s reasons for going after Google are “valid.”
As for the financial impact the fine will have on Google and Alphabet, Moody’s senior vice president Neil Begley said it will be “minimal,” pointing out that Alphabet has more than $92 billion of cash and “marketable securities” available.
“However, the operational impact this fine has on the company could become more negative than the monetary loss,” Begley said. “It is unclear at this moment what changes the EU will force Google to make moving forward to comply with EU antitrust law, but we believe regulatory risk, particularly in Europe, will remain high for the world’s leading digital advertising company.”
Google for its part is already considering an appeal of the commission’s decision and its senior vice president and general counsel Kent Walker said the company “respectfully disagrees” with the commission’s conclusions.
But the commission wasn’t hasty is reaching its decision against Google and the 2.4 billion euro fine is the result of an investigation that began in 2010 and took into account a massive amount of internal data from Google, as well as research and studies of its own.
The commission found that Google has “systematically given prominent placement” to its comparison service since 2008, and the fine “reflects the serious and sustained nature of Google’s violations of EU antitrust rules.”