EU fines Google $1 billion in first Digital Markets Act penalty

The European Commission imposed a €890 million penalty on Alphabet's Google for violating the Digital Markets Act, marking the first enforcement action under the landmark Big Tech regulation.

The European Commission fined Alphabet Inc.'s Google €890 million ($1 billion) on Thursday for violating the Digital Markets Act, the first penalty under the bloc's landmark rules targeting Big Tech market power.

"Google has breached the DMA by favoring its own services on Google Search and by restricting app developers from directing consumers to cheaper alternatives," the European Commission said in a statement.

The fine comprises two separate penalties: €460 million for self-preferencing Google's vertical services — including Google Shopping, Hotels, Transport and Sports results — over third-party competitors in search rankings, and €430 million for anti-steering rules on Google Play that prevented app developers from informing customers about cheaper purchasing options outside the platform. The commission found that Google displayed its own services at the top of search results pages with enhanced visual features and filters, giving competitors less visibility, while simultaneously charging developers excessive steering fees for long periods.

Google has 60 days to implement non-discriminatory search rankings and allow developers full contractual freedom to direct users off-platform, with the commission warning that failure to comply risks periodic penalty payments of as much as 5 percent of Alphabet's global annual turnover. The company has already begun testing changes to its search display, shopping ads and app store steering terms, while evaluating how these principles apply to newer products such as AI Overviews and AI Mode.

The penalty is the first financial enforcement under the DMA, which took effect in March 2024 and imposes a set of "do's and don'ts" on the world's largest technology platforms. The EU has previously fined Google under separate competition rules — €4.3 billion in 2018 for Android antitrust violations and €2.4 billion in 2017 for Google Shopping practices — but the DMA provides regulators with faster enforcement tools and higher penalty ceilings. Under the new framework, the commission can impose fines of as much as 10 percent of a company's global annual revenue, rising to 20 percent for repeat offenders.

The action signals Europe's resolve to enforce its digital rulebook despite opposition from the U.S. government, which has argued that the regulations disproportionately target American technology companies. Alphabet shares face near-term pressure from the regulatory overhang and potential compliance costs, with the fine also raising the prospect of further DMA enforcement actions against other U.S. tech giants including Apple Inc., Meta Platforms Inc. and Amazon.com Inc.

This article is for informational purposes only and does not constitute investment advice.