EU regulators imposed on Wednesday a record €4.3 billion fine on Google for breaking antitrust laws, after long talks with Google on Tuesday.
European Commission has concluded to that fine as Gooogle has abused its Android dominance while blocking device companies from creating devices that used forked – altered – Android versions.
Margrethe Vestager, as European Commissioner for competition, said during a press conference that Google has used “to cement its dominance as a search engine”, holding back innovation from competitors, suggesting that “this is illegal under EU antitrust rules”.
The tax lady, as the U.S. president Donald Trump refers to Vestager, has given Google 90 days to change attitude: “Google must stop its practice within ninety days, otherwise it incurs new penalties,” said Ms. Vestager. As for the amount of the fine, unpublished, it is explained by the fact that “the infringements last since 2011, they are very serious and that the revenues of Google have progressed in the meantime,”she said.
In addition to the record amount of the fine, the Android decision is a blow for Google, as this operating system representing a crucial asset of the online services giant in the sector, as Android now equips 80% of smartphones worldwide, providing Google with an unprecedented distribution of all its other services. In all, 2.2 billion smartphones are running on Android today.
Record fine for big business
The €4.3 billion fine comes after the €2.4 billion then-record fine imposed by the EU’s anti-trust authorities on Google last year, over manipulated search results, as the European Commission has been investigating Google closely on several issues.
“The world is becoming unpredictable,” said Vestager, justifying the large fine compared to the large turnover of Google. “If you are rich there will be a penalty,” the Commissioner added. “No surprises here, it has been done before, it will be done again”.
Focusing on Android over the past year, the EU executive has taken action after a complaint by FairSearch was filed in 2013. Companies like Nokia, Microsoft, and Oracle called Google a monopoly, stating Google has a market share of more than 90 percent for general Internet search, licensed smart mobile operating systems and app stores for Android software, according to the European Commission data for 2016.
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). Along with this condition, Google made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices sold to consumers. As for the forks restriction, Google has prevented manufacturers wishing to pre-install Google apps from selling even a single mobile device running on Android forks not approved by Google.
All the above have resulted to Commission finding two cases of illegal tying. The tying of the Google Search app and of the Google Chrome browser. As search apps represent one of the most important entry point for search queries on mobile devices, that are more and more taking over from desktop computers for internet use. Browsers along with search engines are another very important entry point, and in both cases, Google has found both tyings to be illegal since 2011 and 2012 respectively.
According to the Commission, “pre-installation can create a status quo bias,” as less than 10% of users download an alternate browser in their phone and less than 1% use an alternate search engine than those illegally tied with their smartphones even before they reach their hands, or they must download it, – when usingWindows Mobile devices, to have access to all the functionalities of the mobile phone. This trend is shown by the Commission’s data on 2016, when more than 95% of all search queries were made via Google Search, while and on Windows Mobile devices, more than 75% of search queries happened on Microsoft’s Bing search engine, which is pre-installed on Windows Mobile devices.
Fined under usual procedure
Asked whether this decision could aggravate the tensions between Brussels and Washington, a week away from a meeting between the European Commission President Jean-Claude Juncker and Donald Trump, on trade, Vestager doesn’t seem to worry.
In the past, the US administration has already several times, including under President Barack Obama, accused Brussels of the chase to the Californian tech giant due to protectionist reasons. “I really like the United States, I’m Danish. In Denmark, we love the United States. But here we apply competition law without taking into account the political context,” said Vestager.