Google slapped with $5 billion fine for Android tactics

Jeannie Matthews
July 19, 2018

The commission has concluded that through these contractual restrictions, the tech giant has been able to cement its dominance "in the market for general internet search services, licensable smart mobile operating systems and app stores for the Android mobile operating system".

As for Google Search, Android users wouldn't necessarily have built-in native access to things like Google Assistant artificial intelligence (AI) voice assistant or the Google Search bar that often comes pre-installed on an Android phone's home screen.

More specifically, Google is said to have used its control over Android to require manufacturers to install the Google Search app and Chrome browser in all Android devices if they wanted a Play Store license. The fact that Google was the default search engine was also seen as violating anti-trust, giving an unfair advantage to the company's own search engine. Google says Android has increased competition among smartphone makers, lowering the prices for consumers. Described by the Wall Street Journal as the EU's "sharpest rebuke yet" to the power wielded by the upper echelon of tech companies, the bloc on Wednesday imposed the fine and ordered Google to stop pushing its apps in a way that stymies competitors.

The EU's fine is the biggest ever imposed on a company for anticompetitive behavior.

The record-setting fine almost doubles the €2.4 billion ($2.8 billion) penalty levied against Google previous year for pushing its own shopping results to the top of search pages. Google plans to appeal against the European Commission's decision.

Competition commissioner Margrethe Vestager issued the fine for three "illegal restrictions" on how Android is used. Failing to comply with the decision would make Google liable for a fine of 5 percent of the average daily worldwide turnover of Alphabet, Google's parent company.

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Google forcefully objects to the ruling, calling it a a rejection of Android's entire business model.

"They have denied European consumers the benefits of effective competition in the important mobile sphere", she added.

The fine accounts for around 40% of Google's 2017 net profit of $12.62 billion. This means that people are far more likely to use search apps and browsers already present on their devices, and are unlikely to download competing apps.

In its justification for the historic fine, the EU's competition watchdog said it's based on the "duration and gravity of the infringement".

So, Google developed a strategy to anticipate the effects of this shift, and to make sure that users would continue to use Google Search also on their mobile devices, the Commission said. That's because Google's business practices are being called into question and the search giant isn't winning any arguments.

Android is the most popular mobile software in the world. "We intend to appeal", Pichai said in a blog post. Currently, an OEM that wants to partner with Google and sell certified devices with Google services can not also go out and sell devices with incompatible Android forks - something built from open source without support for standard Android software and features.

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