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 own 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," Vestager said in a statement.
"And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation."
The fine broke the previous EU record for a monopoly case against US chipmaker Intel of 1.06 billion euros.
The decision comes less than a year after Vestager shocked the world and Washington 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 about 8.0 billion euros or 10 percent of Google's total revenue 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.
The case, launched in 2010, is one of three against Google and of several against blockbuster US companies including Starbucks, Apple, Amazon and McDonalds.
Google maintains it's trying to package its search results in a way that makes it easier for consumers to find what they want.
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