EU hits Google with €4.34bn penalty for antitrust violations
Image credit: REUTERS/Dado Ruvic
The European Commission (EC) – the executive branch of the EU – has fined Google for breaching European antitrust rules since 2011, exploiting the dominance of the Android Mobile operating system (OS).
According to Margrethe Vestager, the competition commissioner, Google unfairly took advantage of the market dominance of Android, pressuring smartphone manufacturers to pre-install Google services.
Approximately 80 per cent of the world’s smartphones run using the Android OS.
Vestager reported that while Android’s source code is open source, in practice manufacturers were forced to sign contracts which only permitted the use of Google-approved versions of Android, preventing innovation driven by rivals working with its source code. In order to access Google Play (the Android app store), manufacturers were required to pre-install Google features, such as the Chrome browser and its search engine. Manufacturers and mobile networks were also given financial incentives to pre-install Google search.
“Google has used Android as a vehicle to cement its dominance as a search engine, these practices have denied rivals a chance to innovate and to compete,” Vestager announced. “They have denied European consumers the benefit of effective competition in the important mobile sphere and this is illegal under EU antitrust rules.”
Vestager said that Google had been exploiting its market dominance since 2011. She dismissed Google’s defence that it faces competition from Apple – responsible for the second most popular Mobile OS, iOS – due to the price difference and switching fees.
The EC has applied a €4.34bn (£3.87bn) fine, and demanded that the search giant makes amends within 90 days or face further penalties of up to five per cent of the average turnover of its parent company, Alphabet. The multibillion euro fine is the equivalent of approximately two weeks of revenue for the search giant.
FairSearch, the lobbying group responsible for the complaint which triggered the three-year investigation, welcomed Vestager’s ruling.
Google has said that it will appeal the fine.
“Android has created more choice for everyone, not less,” said a Google spokesperson. “A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition. We will appeal the Commission’s decision.”
Previously, Vestager levied a €2.4bn fine on Google for a different antitrust violation: manipulating its search engine results to give its own shopping service an edge over rivals. Google faces a third, ongoing European antitrust case regarding allegations that Google prevented competitor’s adverts being displayed by third parties using its AdSense platform.
According to Mark Skilton, professor of practice in information systems and management at the University of Warwick: “Google has always been a contradiction, in that it is a market facilitator who also wants to control the market […] it must be remembered Google “defines the market” and is not just an innocent bystander.”
“Google claims it is a free market for users, but that’s just not true in practice. Granted, as we see in the telecoms market, network operators want to protect their billion-dollar investment in the infrastructure that enables all this internet to work, but it’s when it becomes a monopolistic control from the supplier to the end user that it become a problem.”