Google is reportedly going to split off its shopping service to meet EU demands (GOOG)

Google was handed a record €2.4 billion fine in June by the European Commission.
The fine was issued for unfairly promoting its Google Shopping service.
The Commission acts as the European Union's competition watchdog.
Google was ordered to make changes to Google Shopping by September 28 or face further substantial fines.

Google is planning to separate its Google Shopping service from its main search platform to meet EU demands, according to a Bloomberg report.

Google Shopping will become a standalone unit that will have to bid against rivals for ads shown at the top of Google Search results, according to three anonymous sources cited by Bloomberg.

Google was fined €2.4 billion (£2.1 billion) on June 27 by the European Commission, which acts as the European Union's competition watchdog.

At the time, the company was told to change its behaviour within 90 days (by September 28), or fork out up to 5% of its parent company Alphabet's global daily turnover.

The Commission accused the California-based technology giant of abusing its dominant position and promoting its own shopping service in its search results over those of its competitors.

In a bid to keep the Commission happy, Google will reportedly make changes to a panel that contains 10 advertising slots at the top of the search results page, a Bloomberg source reportedly said.

Retailers will be given the chance to bid for advertising space in the panel. Google Shopping can also bid for space in these slots but it will be "run separately to ensure that its bids reflect its own operating costs and aren't subsidised by Google," Bloomberg reports.

Europes Margrethe Vestager is clamping down on Silicon Valley giants

"What Google has done is illegal under EU antitrust rules," Europe's competition commissioner, Margrethe Vestager, said in a statement at the time. "It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation."

She added: "Google has come up with many innovative products and services that have made a difference to our lives. That's a good thing. But Google's strategy for its comparison shopping service wasn't just about attracting customers by making its product better than those of its rivals. Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors."

In a statement issued immediately after the ruling, Google said it "respectfully" disagreed and was considering whether to appeal.

In a blog post published in response to the ruling, Google's senior vice president and general counsel, Kent Walker, challenged the finding.

"Our ability to do that well isn't favoring ourselves, or any particular site or seller — it's the result of hard work and constant innovation, based on user feedback," he wrote."Given the evidence, we respectfully disagree with the conclusions announced today. We will review the Commission's decision in detail as we consider an appeal, and we look forward to continuing to make our case."

Google confirmed to Business Insider on September 11 that it had appealed the fine.

How Google Shopping works

If you're not familiar with Google Shopping, it's that graphical bar that shows up any time you search for a product. For example, if you Google the term "frock", Google will show you some pictures of dresses with some links to third-party retailers such as British department store House of Fraser.

Let's say you didn't want to buy a frock though, and were just searching for the term. Normal results still show up underneath Google Shopping, but it still takes up almost half of the screen.

Google did not immediately respond to request for comment.

Additional reporting by Rob Price and Shona Ghosh.

Google is reportedly going to split off its shopping service to meet EU demands (GOOG)

Europes Margrethe Vestager is clamping down on Silicon Valley giants

How Google Shopping works

JOIN OUR PULSE COMMUNITY!