The European Commission has charged Google with breaking EU antitrust rules, alleging that the search giant is violating the Digital Markets Act (DMA) by giving its own Shopping, Hotels, and Flights services preferential treatment over rival comparison providers. This preliminary ruling could result in fines of up to 10% of Google's global annual revenue, which would be a maximum of $35 billion based on Alphabet's 2024 earnings.

The EU's investigation, which began in March 2024, found that Google's parent company, Alphabet, is breaching the DMA by favoring its own products on the Google Search results page. This means that suppliers and competitors do not benefit from fair ranking practices, according to European Executive Vice President for Clean, Just, and Competitive Transition, Teresa Ribera. The commission also accuses Alphabet of preventing app developers on its Play Store from steering customers to other distribution channels, violating anti-steering rules under the DMA.

Google has responded to the charges, with Senior Director of Competition, Oliver Bethell, calling the changes Europe is pushing for in search "misguided." Bethell argues that if Google can't show travel results that take people directly to airline sites, they typically end up with a more expensive ticket because airlines have to pay commissions to intermediary websites. He also claims that the changes have led to traffic declines of up to 30% for some businesses.

In addition, the EU believes that Alphabet does not effectively allow Android phone users to be told about or directed to cheaper offers from app developers outside the Google Play store. Bethell counters that the commission's findings on app distribution "create a false choice between openness and security." He says the government "is effectively forcing us to choose between a closed model" – more similar to Apple's iOS – "and an unsafe one," where Google is forced to give users access to "scammy or malicious links that take our users outside of the secure Play environment."

The EU's ruling comes after the company introduced several changes to its Search services in an attempt to comply with new DMA rules. These included adding new search result layouts that boosted links to third-party comparison websites and removing the Google Flights widget for Search users in the EU. Despite these efforts, the EU has deemed them insufficient, and Google can now challenge the preliminary charges or make additional compliance changes ahead of the EU's final ruling.

The implications of this ruling are far-reaching, with potential consequences for other tech giants. Apple was the first company to be charged under the DMA in June 2024, and soon after, Meta was hit with a preliminary ruling that its advertising model also violates the act. The EU's efforts to regulate big tech are likely to continue, with the DMA targeting specific "gatekeepers" – companies that provide core digital services to European consumers – requiring them to allow more interoperability and avoid giving their own digital services preferential treatment.

The ruling also comes amid rising tensions between European policymakers and US President Donald Trump, who has surrounded himself with fawning US tech CEOs who have criticized fines placed on them by the EU as a form of taxation. The Financial Times reported in January that an increase in US pressure was allegedly leading the EU to soften its approach to big tech regulation and reassess its investigations into Apple, Meta, and Google.

As the EU continues to push for greater regulation of big tech, the consequences of this ruling will be closely watched. Will Google be able to make the necessary changes to comply with the DMA, or will it face significant fines? The impact on the tech industry as a whole will be significant, and this ruling marks a major milestone in the EU's efforts to promote fair competition and innovation in the digital market.