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A Brief History of the Impact of E.U. Antitrust Fines on Tech Stocks

Margrethe Vestager, the European Union’s commissioner for competition, at a news conference in Brussels after Google’s antitrust fine on Wednesday.Credit...Stephanie Lecocq/EPA, via Shutterstock

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The European Union on Wednesday continued its attempts to rein in Silicon Valley’s tech giants — but history suggests that investors have little to fret.

The European Commission, the bloc’s executive arm, hit Google with a record $5.1 billion fine on Wednesday. Antitrust officials argued that the technology company had broken the law by striking deals with smartphone manufacturers that favored Google services, like its Chrome browser, over those offered by rivals. The commission claimed that the arrangement had shut out competition and helped Google remain dominant in the industry.

This is the latest in a series of actions by European regulators to check the world’s largest technology companies. But while the European Commission has issued increasingly large fines, they have had little sustained impact on the share prices of the companies that it pursues.

DealBook looked back at the European Union’s five biggest antitrust fines against technology companies over the past decade and the impact that they have had on their stocks. Shaded areas in the charts below represent the seven days after the announcement of the fine.

Just over a decade ago, the European Commission hit Microsoft with the largest fine it had ever imposed on an individual company. Microsoft was forced to pay $1.3 billion for failing to introduce remedies outlined in a 2004 judgment, which had found that the company abused the dominance of its Windows operating system. The company’s stock struggled in 2008, but because of a rapidly worsening financial crisis.

Just over a year later, the European Commission issued another record-breaking fine — a $1.45 billion penalty on Intel. The commission found that the chip maker had abused its dominance in the semiconductor market, by giving some computer companies rebates for buying all or most of their processor supplies from it. The fine didn’t dampen the rise in Intel’s shares that year. The stock finished 2009 up 28 percent, compared with a 9.6 percent gain for the Standard & Poor’s 500-stock index.

Five years after one record-breaking fine, Microsoft received a further $732 million penalty from the European Union’s competition regulator for failing to comply with the responsibilities of an antitrust settlement in 2009. Under that agreement, Microsoft was supposed to make it easier for Windows users to download rival browsers rather than having to use Internet Explorer. After just three years, rather than the stipulated five, some products didn’t include the competition-friendly feature. Still, the company’s shares barely flinched at the penalty. The stock closed out 2013 up 40 percent, compared with a 29.6 percent gain for the S. & P. 500.

The European Commission fined Facebook $122 million in the spring of 2017 for providing misleading statements during the company’s 2014 acquisition of the messaging service WhatsApp. The social network said it would not combine its data with that of WhatsApp, but it did so later — raising concerns that it could gain an unfair advantage over rivals in the advertising business. The fine proved a mere blip for Facebook’s rising stock price.

Until Wednesday, the European Union’s largest antitrust punishment against a technology company was a $2.7 billion fine of Google in June last year. The European Commission found that the company had illegally favored its own shopping service over its rivals in online search results. The search giant’s shares slipped slightly after news of the fine but quickly resumed climbing. From June 27 through the end of 2017, the stock gained 55 percent.

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