All For Show? EU Slaps Google With $5B Fine

  • The European Union hit Google with a record antitrust fine for abusing the dominance of its Android mobile operating system.
  • It ordered Google to put an end to illegal conduct within 90 days, or else face additional charges of up to 5 percent of Alphabet’s average daily worldwide turnover.
  • The ruling comes little over a year after the EU fined the company $2.7 billion for favoring its shopping service over competitors.

European Union regulators have slapped Alphabet-owned Google with a 4.34 billion euro ($5 billion) antitrust fine for abusing the dominance of its Android mobile operating system, which is by far the most popular smartphone OS in the world.

The European Commission, the EU’s executive body, ordered the company to put an end to illegal conduct within 90 days, or else face additional charges of up to 5 percent of Alphabet’s average daily worldwide revenue.

The EU fine is the largest ever issued to Google, which was slapped with a $2.7 billion penalty for favoring its shopping service over competitors last year.

Google said in a statement that it would appeal the ruling, arguing against the EU’s view that its software is restrictive of fair competition.

“Android has created more choice for everyone, not less,” a spokesperson for the company said in the statement. “A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition.”

Shares of the search giant slipped 0.4 percent in premarket trade on news of the fine, which could have been as high as $11 billion, or 10 percent of Alphabet’s annual global revenue, according to EU regulation guidelines. The EU first opened its investigation into Android in 2015, two years after receiving a complaint from FairSearch, which, at the time, included the likes of Microsoft and Nokia.

European officials say Google’s parent company unfairly favored its own services by forcing smartphone makers to pre-install Google apps like Chrome and Search in a bundle with its app store, Play. It also said Google violated competition rules by sometimes paying phone makers to exclusively pre-install Google search on their devices or sign agreements not to sell phones that run other modified, or “forked,” versions of Android.

European Competition Commissioner Margrethe Vestager speaks during a news conference at the EU Commission headquarters in Brussels, April 15, 2015.

European Competition Commissioner Margrethe Vestager speaks during a news conference at the EU Commission headquarters in Brussels, April 15, 2015.

Google has previously denied these accusations, arguing that phone makers still have plenty of choice and that bundling search and other apps with Play has ultimately allowed it to provide its services for free.

The EU on Wednesday pointed to Apple in its decision, Google’s fiercest competitor in the smartphone market, saying that the smartphone maker did “not sufficiently constrain” Google. Apple also pre-installs a number of apps on its iPhone models.

In a news conference on Wednesday, Margrethe Vestager, the EU’s competition commissioner, reiterated the argument presented in the decision. She said Google’s model “prevents device manufacturers from using any alternative version of Android that was not used by Google.”

“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,” she said.

Along with the fine, the EU aims to change the way that Google conducts its business. Although the company doesn’t break out how much revenue it makes from Android, it has said that its advertising business is growing much faster on mobile than desktop. By bundling its apps together, Google has much more real estate to sells its ads.

The commission is still investigating a third antitrust case against Google’s search advertising service, AdSense.

Original Article:https://www.cnbc.com/2018/07/10/eu-hits-alphabet-google-with-android-antitrust-fine.html

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