Google is facing a record-breaking 4.34 billion euro ($5 billion) fine by EU for violating antitrust laws – abusing its Android market dominance, which represents the world’s most popular smartphone operating system. The Commission says Google antitrust abuse of its Android market is in three major areas – favoring its services by incorporating its OS with pre-installed Chrome and search engine apps, blocking the creation of “forked” Android version by phone manufacturers and paying “certain large manufacturers and mobile network operators” to exclusively pre-stalls its Google search engine app on their devices.
The executive body of the European Commission gave Google 90 days to end these illegal conducts or face additional charges which may amount to 5% of the average daily worldwide revenue of parent Alphabet. The EU started investigating Google’s Android in 2015, after FairSearch filed a complaint against the search giant and the likes of Oracle, Nokia, and Microsoft.
The $5 billion EU fine is now the biggest the search giant has received from the commission after toppling Intel last year with a $2.7 billion fine for limiting competitors of its shopping service through manipulated search results. News of the fine triggered a drop in Google’s share by 0.4% in premarket trade. And according to EU regulation guidelines, the fine could have been a lot more; 10% of Alphabet’s annual revenue or $11 billion.
The commission on Wednesday disclosed that Google’s closest competitor in smartphone OS Apple did “not sufficiently constrain” Google in its business model, though Apple also pre-installs some apps on its iPhone devices.
EU competition commissioner Margrethe Vestager yesterday recapped the argument presented in the decision in a news conference reported by CNBC. Google’s business approach "prevents device manufacturers from using an alternative version of Android that was not used by Google," Vestager said.“Our decision stops Google from controlling which search and browser apps manufacturers can pre-install on Android devices or which Android operating system they can adopt.”
Google plans to appeal EU decision
Google is arguing against the view by EU that its software restricts fair competition and have said it would appeal the ruling in a statement. The company’s spokesperson reaffirmed that Android has multiple choices for its users and the ecosystem which is supplied at low prices supports robust competition at large.
Arguing that phone manufacturers have many options, Google has denied the accusations by EU previously and the tech giant also opines that its integration of other apps with Play store enables it to provide free services.
The EU aims to change Google’s business model
The Commission is aiming to change Google’s business conduct which allows it to enjoy a large estate to sell ads on mobile. Google has reported that its advertising business on a mobile platform is growing much faster than desktop, although the company doesn’t present its revenue from Android separately. Currently, the EU watchdog is investigating a third antitrust case against Google’s Adsense and search advertising service.
The EU’s decision seems like a route to prevent Google from bundling its services to Android, not necessarily asking Google to change the significance of Android. While phone makers will still have options to bundle Google search and Chrome apps, they would not be compelled to do so again by Google. They will also have the choice to offer smartphones with Android forked versions.