It’s official: European Competition Commissioner Margrethe Vestager has hit Google with a record €4.3 billion fine (£3.8 billion) fine for abusing its market dominance.
The company imposes illegal restrictions on mobile phone makers and network operators, making them install its apps and sign up to restrictions on open source variants of the Android operating system (OS), the European Commission (EC) said.
It claimed that this has strangled the growth of alternative Android-based OSs like Amazon’s “Fire OS”.
Google has hit back saying it is appealing: “Android has created more choice for everyone, not less. A vibrant ecosystem, rapid innovation, and lower prices are classic hallmarks of robust competition. We will appeal the Commission’s decision.”
In a statement published at noon, the European Commission said: “Since 2011, Google has imposed illegal restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet search.”
The EC added: “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.”
“Android Used as a Vehicle to Cement Search Dominance”
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.”
She added: “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.”
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
As Computer Business Review reported yesterday, 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).
It has also 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”).
Margrethe Vestager’s team also assessed in detail Google’s arguments that the tying of the Google Search app and Chrome browser were necessary, in particular to allow Google to monetise its investment in Android, and concluded that these arguments were not well founded: “Google achieves billions of dollars in annual revenues with the Google Play Store alone, it collects a lot of data that is valuable to Google’s search and advertising business from Android devices, and it would still have benefitted from a significant stream of revenue from search advertising without the restrictions”.
Google’s restriction on Android forks meanwhile reduced the opportunity for devices running on Android forks to be developed and sold, the EC said.
“For example, the Commission has found evidence that Google’s conduct prevented a number of large manufacturers from developing and selling devices based on Amazon’s Android fork called ‘Fire OS’.
“In doing so, Google has also closed off an important channel for competitors to introduce apps and services, in particular general search services, which could be pre-installed on Android forks. Therefore, Google’s conduct has had a direct impact on users, denying them access to further innovation and smart mobile devices based on alternative versions of the Android operating system. In other words, as a result of this practice, it was Google – and not users, app developers and the market – that effectively determined which operating systems could prosper.”
Google has been contacted for comment.