Google just got hit with a huge $5bn Android fine from EU: The European Commission has fined Google $5 billion for breaching EU antitrust rules. Since 2011, Google has imposed illegal restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet search.
Google must now bring the conduct effectively to an end within 90 days or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google’s parent company.
Commissioner Margrethe Vestager, in charge of competition policy, said: “Today, mobile internet makes up more than half of global internet traffic. It has changed the lives of millions of Europeans. 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. 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.”
Google just got hit with a huge $5bn Android fine from EU
In particular, 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);
- 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
- 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”).
Google’s strategy and the scope of the Commission investigation
Google obtains the vast majority of its revenues via its flagship product, the Google search engine. The company understood early on that the shift from desktop PCs to mobile internet, which started in the mid-2000s, would be a fundamental change for Google Search. 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.
In 2005, Google bought the original developer of the Android mobile operating system and has continued to develop Android ever since. Today, about 80% of smart mobile devices in Europe, and worldwide, run on Android.
What is the case against Google?
Ms Vestager alleges that there are three ways that Google has acted illegally:
- it required Android handset and tablet manufacturers to pre-install the Google Search app and its own web browser Chrome as a condition for allowing them to offer access to its Play app store
- it made payments to large manufacturers and mobile network operators that agreed to exclusively pre-install the Google Search app on their devices
- it prevented manufacturers from selling any smart devices powered by alternative “forked” versions of Android by threatening to refuse them permission to pre-install its apps
Ms Vestager acknowledged that Google’s version of Android does not prevent device owners downloading alternative web browsers or using other search engines.
But she said that only 1% of users downloaded a competing search app, and 10% a different browser.
“Once you have it, it is working, very few are curious enough to look for another search app or browser,” she said.
What does the regulator want Google to do now?
The Competition Commissioner said that Google carried out its abuse at a time when the mobile internet was growing quickly, helping it ensure that its advertising-supported search service repeated the success it had already found on desktop computers.
She cannot turn the clock back, but said the size of the fine had been based on the firm’s search-related earnings from Android devices in Europe since 2011.
She has, however, said the firm must now stop all of the practices outlined above and refrain from any measures with a similar goal.
Russia may give one example of how this could be achieved.
After similar complaints by the country’s regulator, Google now offers Android users a choice between Google, Yandex and Mail.ru as the default search engine the first time they use the Chrome browser.
How has the EU punished others?
The European Commission had the power to fine Google up to 10% of its annual revenue. Based on its last annual report, that would have amounted to $11.1bn (£8.5bn).
The$5bn figure is, however, a record-sized sum for the commission.
Earlier punishments include:
- fines totalling €3.8bn against several truck-makers accused of price collusion, which were imposed in July 2016 and September 2017
- the €2.24bn fine against Google for promoting its own shopping comparison service at the top of its search results, which was announced in June 2017
- two fines totalling €1.46bn against Microsoft related to the bundling of its Explorer browser with Windows, and failing to keep a pledge to provide users with a choice of other browsers. The two penalties were announced in February 2008 and March 2013
- a €1.35bn collective fine against several car glass producers, which had been accused of illegally sharing commercially sensitive information. This was made in November 2008
- a €1.06bn fine against Intel, which was accused of offering discounts to computer-makers that avoided rivals’ computer chips. It was announced in May 2009
- a €997m fine against Qualcomm, which was penalised over claims it had paid Apple to use its chips. This was announced in January 2018