It gave the United States company 90 days to stop or face fines of up to 5 per cent of the average daily worldwide turnover of parent company Alphabet. "This is not competition on the merits and is illegal under European Union antitrust rules".
Crucially for Google, Brussels has demanded that the USA tech giant change the business model for Google Shopping to meet the EU's concerns.
"Other regulators and companies have been intimidated by Google's overwhelming might, but the Commission has taken a strong stand and we hope that this is the first step in remedying Google's shameless abuse of its dominance in search", the company said in a statement on Wednesday. "Google's own comparison shopping service is not subject to Google's generic search algorithms, including such demotions".
The fine broke the previous European Union record for a monopoly case against U.S. chipmaker Intel (Euronext: INCO.NX - news) of 1.06 billion euros.
"The decision is a real kicking for Google".
For its part, Google has said that there's nothing anti-consumer about its policies, and that it intends to appeal the ruling.
The biggest risk to Google is not the fine but the changes demanded to its business, said Richard Windsor, an independent financial analyst who tracks competition among the biggest USA and Asian internet and mobile companies.
As it "respectfully" disagrees with the EU's conclusions, Google will be considering an appeal and will continue to make its case.
"That is why Google shows shopping ads, connecting our users with thousands of advertisers, large and small, in ways that are useful for both".
The EU has fined Google a massive €2.42 billion ($A3.59 billion) after it found the search behemoth had been promoting its own shopping comparison sites at the top of its searches. "This decision means consumers receive comparison shopping results that offer genuinely the best purchasing options", said Thomas Vinje, a lawyer for FairSearch, a group of companies that complained to the EU. She said hundreds of companies, including some based in the US, complained about the way Google displayed its shopping service.
The European Commission has been investigating Google Shopping since late 2010.
"But this decision will allow us to focus on innovation and to provide consumers with wider choice and lower prices and that's what's really exciting", Mr Stables said.
Based on the company's most recent financial report, that amounts to about $14m a day.
The action was prompted by scores of complaints from rivals such as USA consumer review website Yelp, TripAdvisor, UK price comparison site Foundem, News Corp and lobbying group FairSearch. The EU has two other investigations now open into Google's business practices in other services: one involving its Android operating system and another concerning its AdSense service.
The second pertains to AdSense, Google's advertising tool.