EU fine to cut Google profit by $2.74bn

Bloomberg

Alphabet Inc. said that the European Commission’s recent antitrust fine will reduce second-quarter profit by about $2.74 billion.
The company plans to report the fine in a separate operating expense line on its income statement. It’s not tax deductible, so the charge will reduce Alphabet’s net income and earnings per share by the full $2.74 billion amount, it said in a statement.
Analysts expect Alphabet, the owner of Google, to report second-quarter net income of $5.78 billion, according to data compiled by Bloomberg.
Analysts dismissed the EU fine as a threat to Google’s stock position. However several raised concerns about the potential impact of any forced changes to Google’s shopping service, a growing revenue source. Google has 90 days to deliver a solution that appeases EU regulators or face further fines.
The decision was a landmark in the seven-year probe fueled by complaints from small comparison shopping websites as well as bigger names, including News Corp., Axel Springer SE and Microsoft Corp. Companies that helped trigger the probe will make their presence felt as Google tries to comply with the EU’s order.
The EU is planning to spend as much as 10 million euros on technical expertise to monitor how Google obeys its order to give equal treatment to price-comparison sites, according to a tender it published. It’s calling for help on search-engine optimization and marketing to evaluate any changes Google makes.
Regulators have said the shopping decision “is a precedent which establishes the framework for the assessment of the legality of this type of conduct,” cautioning that each situation — whether it be maps or Google images — would require a case-specific analysis to account for the characteristics of each market.
In addition to possible exposure in relation to maps and other services, the search-engine giant may face more immediate enforcement after being accused of antitrust breaches in relation to its Android mobile-phone software, bundled for free with Search and other Google services on handsets, and the AdSense online advertising platform.
Google has slowly encroached on the travel-booking companies’ territory, making it easier to search for flights and hotels without going to sites like Expedia, Booking.com or Kayak.com. At the same time, the travel companies remain among Google’s largest customers, spending billions on search advertisements to drive travelers to their own websites.