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Europe Fines Google $5 Billion for Abusing its Android Dominance

18 Juillet 2018

Competition commissioner Margrethe Vestager issued the fine for three "illegal restrictions" on how Android is used.

The statement added that Google "prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android".

Google also gave "financial incentives" to manufacturers and mobile network operators if they pre-installed Google Search on their devices, the commission said.

Google Search is also the most widely used search engine in the world, performing roughly 95% of all searches despite the efforts of competing services such as Bing and DuckDuckGo.

Google's practices have denied rival search engines the possibility to compete on the merits. Regulators came out with a preliminary ruling in April 2016 in which they said Google had market shares exceeding 90 percent in most European countries in the realm of licensable mobile operating systems.

The new fine will, if confirmed, surpass the 2.4-billion-euro penalty that the European Union imposed on Google over its shopping comparison service in 2017.

Spokespeople for Google and the EU's Competition Commission did not immediately respond to request for comment.

Google could be hit with a fine that equals up to 10pc of its annual revenues. By doing these deals, Google has broken European antitrust laws and therefore must be punished, but also forced to change its practices.

Google, however, argues that by providing Android software free of charge to device makers it's enabled the proliferation of cheap phones, and in doing so, increasing access to online services. If phone makers and mobile network operators couldn't include our apps on their wide range of devices, it would upset the balance of the Android ecosystem.

On EU-US relations, Ms Vestager said: "I very much like the US, but the fact is this has nothing to do with how I feel, nothing whatsoever". The commission found that while manufacturers were interested in Amazon's operating system, Google's restrictions meant that it could only launch on Amazon devices.

That's the kind of antitrust fine record that's going to be hard to break, not that any other company might be interested in doing it.

What could have a more lasting effect on Google's business is if the European Union rules that smartphone makers no longer need to pre-install Google products on their phones in order to access the Google Play app store.

For its part, Google has denied it has abused this dominant position, saying it is not guilty of any wrongdoing.

Unsurprisingly, Google has disputed its punishment, claiming it to be "unjustified".

EU Competition Commissioner Margrethe Vestager spoke by telephone with Google chief Sundar Pichai on Tuesday night to tell him about the decision in advance, a source close to the matter told AFP. He talks about the "careful balance" of the Android business model, which allows them to offer the OS for free in return for including their app bundle. The EU didn't believe that argument held water. Google's licensing conditions make it impossible for manufacturers to pre-install some apps but not others.

Europe Fines Google $5 Billion for Abusing its Android Dominance