Considering Android’s massive mobile market share, this was pretty much an inevitability. But yesterday it finally happened for real: The EU slapped Google’s parent company Alphabet with a record fine of €4.34 billion ($6.83 billion) for violating European antitrust regulations.
According to EU officials, Google’s terms for licensing its full-featured version of the Android OS — which requires device makers to pre-install Google apps such as Chrome, YouTube, Gmail, Google Maps and the Play Store — violate antitrust laws and put competing products at an unfair disadvantage.
Fine of €4,34 bn to @Google for 3 types of illegal restrictions on the use of Android. In this way it has cemented the dominance of its search engine. Denying rivals a chance to innovate and compete on the merits. It’s illegal under EU antitrust rules. @Google now has to stop it
— Margrethe Vestager (@vestager) July 18, 2018
The ruling cites deals with Samsung, Huawei, HTC and others as evidence of Google abusing its market dominance.
According to EU Commissioner for Competition Margrethe Vestager, “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.”
Additionally, the EU says Google’s history of paying large manufacturers to exclusively pre-install the Google Search app is unlawful, and that these practices have made the marketplace less competitive.
Naturally, Google denies any wrongdoing. Yesterday it posted a blog from CEO Sundar Pichai titled, “Android has created more choice, not less.” In the blog, Pichai argued that the ruling “ignores the fact that Android phones compete with iOS phones,” and “also misses just how much choice Android provides to thousands of phone makers and mobile network operators who build and sell Android devices”.
Pichai also says removing a pre-installed app is easy, and in the post, there’s even a gif showing how long it takes to delete one and replace it with something else, before Pichai concludes by saying that Google intends to appeal the decision.
This most recent fine follows a €2.42 billion fine ($3.8 billion) from 2017, in which Google was accused of manipulating shopping results, and comes in the wake of rising fears of tech giants as a whole, especially after Facebook’s mishandling of user data in the Cambridge Analytica scandal.
And for those who remember back when Microsoft got sued for antitrust in 2001, it was a very similar situation in which the Microsoft was accused of having a monopoly over x86-based PCs and web browsers due to the company’s practice of bundling Internet Explorer with Windows.
However, even if Alphabet is forced to hand over €4.34 billion ($6.83 billion), it isn’t as though Google doesn’t have the money to pay up — though with a net profit of $US12.6 billion ($17 billion) in 2017, the EU’s fine would eliminate around 40 per cent of Alphabet’s gains last year.
And if Google refuses to comply with the EU’s demands within 90 days, the company could get hit with additional penalties worth up to five per cent of Alphabet’s “average daily worldwide turnover”.
This is merely the start of a much bigger trend as tech giants face intensifying scrutiny from regulators and consumers alike.