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Alphabet (Google) profits shrink after EU fine

Jonny Clark

25th July 2017

How much impact can governments have on markets? Alphabet (the parent company of Google) have announced that their overall profits fell by 28% for the last quarter following a fine of $2.74bn dollars from the EU.

Nevertheless, it is difficult to imagine many firms being able to withstand a fine of that size and remain in business so it does beg the question about whether the government are doing enough to impact on markets to keep them genuinely competitive.

The fine was levied as the EU concluded that Google were giving themselves an unfair advantage on their own search engine by promoting their own products.  The argument goes that, as Google has 64% of the search engine market the self-promoting algorithms being used were giving Alphabet an unfair advantage by suppressing customer knowledge of the availability and prices of alternative products.

The fine on Alphabet was more than double that of the previous biggest fine by the EU on a tech company ($1.1bn on Intel in 2009). A Telegraph report is available here.

Jonny Clark

Jon Clark has been teaching economics and business studies for over 25 years primarily in the Further Education sector. Before joining tutor2u, he was a senior manager at South Cheshire College in Crewe.

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