Hard-charging European Commission competition chief Margrethe Vestager said Google had "abused its market dominance".
Hard-charging European Commission competition chief Margrethe Vestager said Google had "abused its market dominance" as the world's most popular search engine to give illegal advantage to its Google Shopping service.
"What Google has done is illegal under EU antitrust rules. It denied other companies the chance to compete on the merits and to innovate," Denmark's Vestager told a news conference.
"And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation."
Google now has 90 days to "end this conduct" or face further penalty payments, Vestager said.
The fine broke the previous EU record for a monopoly case against US chipmaker Intel of 1.06 billion euros in 2009.
Google said that it "respectfully" disagreed with the EU decision, which followed a seven-year investigation, and was considering an appeal.
"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," Kent Walker, the company's senior vice president and general counsel, said in a statement.
Google insisted that it "shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both."
The decision comes less than a year after Vestager shocked Washington and the world with an order that iPhone manufacturer Apple repay 13 billion euros in back taxes in Ireland.
Crucially for Google, Brussels has demanded that the US tech giant change the business model for Google Shopping to meet the EU's concerns.
While an EU record, the amount is below the maximum possible of more than 8 billion euros or 10 percent of Google's total revenue of 90 billion dollars last year.
Brussels accuses Google of giving its own online service, Google Shopping, too much priority in search results to the detriment of other price comparison services, such as TripAdvisor and Expedia.
"Google's market dominance has given the company power to decide the fate of all but the biggest online service providers -– in other words nearly every company," said Fairsearch, a lobby of complainants, in a statement.
The case, launched in 2010, is one of three against Google and of several against blockbuster US companies including Starbucks, Apple, Amazon and McDonalds.
In the other Google cases, the EU is examining Google's AdSense advertising service and its Android mobile phone software.
The cases have stoked tensions with Washington and could now face the wrath of Trump, the real estate tycoon who won office on his "America First" slogan.
The decision come after a long negotiation period with many twists and turns in which the two sides tried to settle the case amicably.
Vestager's predecessor, the Spaniard Joaquin Almunia, made three attempts to resolve the dispute but in each case intense pressure by national governments, rivals and privacy advocates scuppered the effort.