EU Fines Google $5 Billion for Breaching Antitrust Rules in Android

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The European Commission announced a fine against Google today of €4.34 billion ($5.04 billion) for breaking antitrust policies with Android.

According to the EU, Google broke antitrust rules in regards to the commercialization of the Android OS in three ways:

⥭  Google required phone manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google’s app store (the Play Store);
⥭  Google made payments to certain phone manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices;
⥭  Google prevented phone 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”).

None of the above explanations reveal anything new. All the practices have been publicly known for more than a decade.

Illegal practices helped Google gain a dominant position

The EU claims these practices have helped Google gain a dominant position in the mobile search market by making it near impossible for mobile search competitors to gain any foothold on Android devices.

Furthermore, Google’s tight control of the Android OS licensing has also prevented the proliferation of Android operating system forks where competitors could have gained a similar foothold.

But the EU claims that these practices have hurt more than the market for mobile Internet searches, and have also affected the browser market as well, where the Chrome app gained an obvious and hard to beat advantage by being bundled in with all Android devices.

This was a foreseeable fine, as Microsoft, too, had been penalized by the EU for bundling Internet Explorer with Windows, not once, but twice —in 2008 (€899 million / $1.04 billion) and 2013 (€561 million / $651 million).

The EU says that Google now has 90 days to stop these practices or risk facing penalty payments of up to 5% of the average daily worldwide turnover of Alphabet —Google’s parent company.

Largest fine for a tech firm in EU’s history

This fine is the EU’s largest punishment ever imposed on a tech firm. The previous record also belonged to Google. The EU previously fined Google €2.42 billion ($2.72 billion) for abusing its dominant market position for tweaking search results to favor its Google Shopping service to the detriment of its direct competitors.

The EU is also currently investigating Google in another antitrust case relating to its AdSense service. In July 2016, the EU put out a preliminary conclusion in this case that Google abused its dominant market position to put restrictions on the ability of websites to display search advertisements from Google’s competitors.

The EU began investigating Google in regards to its Android OS practices after a complaint filed in 2013 by FairSearch, an organization made up of other tech companies such as Microsoft, Nokia, and Oracle. The organization welcomed the EU’s fine today in a press release.

“The complaint dragged on for five years because Google used every trick in its book to delay action,” said Thomas Vinje, counsel to FairSearch. “FairSearch is satisfied finally to see these anti-competitive practices prohibited.”

The fine —exactly  €4,342,865,000— and explanation are available in the EU’s decision, here.

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