EU Slaps Record EUR 4.34 Billion Fine on Google over Android as Unfair Competition Tool

EU Slaps Record EUR 4.34 Billion Fine on Google over Android as Unfair Competition Tool

The EU has imposed a record antitrust fine on Google worth EUR 4.34 billion (over USD 5 billion) for using its Android mobile operating system as a tool for unfair competition practices.

According to the European Commission, the EU executive, since 2011, Google has imposed illegal restrictions on Android device manufacturers and mobile network operators “to cement its dominant position in general Internet search.”

The Commission now requires that Google terminate the respective practices within 90 days, or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google’s parent company.

Android runs about 80 percent of the world’s smartphones according to market research firm Strategy Analytics.

“Our case is about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to the Google search engine,” EU Commissioner for Competition Margrethe Vestager stated.

“In this way, Google has used Android as a vehicle to cement the dominance of its search engine. These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules,”  the Commissioner elaborated.

The Commission points out that Google has required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google’s app store (the Play Store). It has made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices. And it has prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google (so-called “Android forks”).

The Commission decision concludes that Google is dominant in the markets for general Internet search services, licensable smart mobile operating systems and app stores for the Android mobile operating system.

The EU executive has already slapped a major fine on Google once: in June 2017, it fined Google EUR 2.42 billion for abusing its dominance as a search engine by giving an illegal advantage to Google’s own comparison shopping service.

The Commission states it is currently actively monitoring Google’s compliance with that decision.

The Commission also continues to investigate restrictions that Google has placed on the ability of certain third party websites to display search advertisements from Google’s competitors (the AdSense case). In 2016, it came to the preliminary conclusion that Google has abused its dominant position in a case concerning AdSense.

The EU’s latest fine on Google represents just two weeks of revenue for its parent company Alphabet Inc., whose cash reserves amount to USD 102.9 billion, Reuters reports.

“Android has created more choice for everyone, not less. A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition,” Google is quoted as saying.

The European Commission has rejected Google’s argument of competition from Apple, by stating that the iPhone maker was not a sufficient constraint because of its higher prices and switching costs for users.

The EU antitrust fine on Google might contribute to the simmering trade war between the European Union and the United States.

European Commission President Jean-Claude Juncker is set to meet with US President Donald Trump next week in Washington in an attempt to persuade him not to impose new tariffs on EU car exports to the US as Trump has threatened.

(Banner image: European Commission)

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