BRUSSELS -- The European Union fined Alphabet's Google $1 billion for breaching its digital competition rules in a case that risks aggravating tensions with the Trump administration as it prepares new global tariffs.

The European Commission -- the EU's executive arm -- said Thursday that Google unfairly favored its own services on its widely used search engine and that the company imposed restrictions on app developers, preventing them from freely steering users to other offers outside of the company's Play Store.

The EUR890 million fine, equivalent to $1.02 billion, comes at a risky time for the EU's economic relationship with the U.S. The Trump administration -- which has repeatedly lashed out at the EU over its tech regulations -- is readying new tariffs to replace temporary levies that are due to expire on Friday.

A group of U.S. lawmakers wrote a letter to President Trump this week asking him to use "all available tools," including tariff investigations, to retaliate against EU tech rules if dialogue with the bloc doesn't work.

"It is important to make clear that the EU's access to the U.S. market is not guaranteed and can be limited should the EU continue to pursue discriminatory acts, policies and practices in the digital sector," the letter said.

Thursday's fine is Google's first penalty under the Digital Markets Act, the bloc's digital antitrust rules. The fine is divided between the commission's objections to the company's search engine and Play Store terms.

Google said the EU's rules are making its product offerings in Europe worse.

The EU's implementation of the Digital Markets Act "continues to break everyday products," Kent Walker, Google's president of global affairs, said. "To comply, we are having to strip away real-time Search features Europeans love -- like instant pricing and direct availability for hotels, flights, and restaurants -- and dismantle safety protections on Google Play."

The EU's decision is a culmination of a yearslong investigation into Google's compliance with the law. Google has made several tweaks to how its products work, including testing results for services such as flights and hotels, testing changes to how it presents shopping ads and content, and changing its terms for app developers steering customers toward offers outside of its own Play Store.

The commission said it is assessing those changes.

Trump has threatened retaliation against the EU over past tech company fines. After the bloc fined Google EUR2.95 billion last year for abusing the dominance of its advertising-technology tools, Trump threatened to open a trade investigation "to nullify the unfair practices." He didn't take any action at the time.

European officials say their tech laws aren't discriminatory and that the bloc has the right to set its own rules. The Digital Markets Act, which aims to make it easier for smaller companies to compete with digital giants, regulates how companies operate within the bloc but doesn't dictate how they run their businesses in the U.S. or elsewhere.

U.S. officials previously told the EU that they intend to stick to the terms of the U.S.-EU trade deal that was reached last year. The U.S. agreed at the time to cap most tariffs on the bloc at 15%.

An EU official said Thursday that the bloc is ready to engage with the Trump administration on its tech rules. The commission didn't have any indication that a new tariff investigation on European tech legislation was in the works, the official said.

Write to Edith Hancock at edith.hancock@wsj.com and Kim Mackrael at kim.mackrael@wsj.com

(END) Dow Jones Newswires

July 23, 2026 07:45 ET (11:45 GMT)

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