Google hit with $5.1b fine in EU’s Android antitrust case

A 90-day window opened for Google on Wednesday: that’s how much time it has to stop conducting “illegal practices regarding Android mobile devices to strengthen dominance of Google’s search engine”, according to the European Commission.

That announcement came along with a record-breaking fine of €4.34b (USD $5.05b).

According to the New York Times, this steep penalty is “among the most aggressive regulatory moves ever made against American technology companies.”

It almost doubles the €2.42b – about USD $2.8b – that the European Union levied against the company last year over promoting its own shopping comparison service at the top of its search results.

Having said that, the fine represents just over two weeks of revenue for Google parent company Alphabet, according to Reuters – a sum that “would scarcely dent” the company’s current cash reserves of $102.9b.

EU Commissioner Margrethe Vestager, in charge of competition policy, said in a press release on Wednesday that the case is about the following three restrictions that Google has foisted on Android device manufacturers and network operators – practices that ensure that Android device searches wind up going to Google’s search engine, the European Commission claims. 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).
  • Made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices.
  • 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”).

These antitrust measures employed by Android have helped keep Google on the throne as the supreme search leader, Vestager said:

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.

Besides accusing Google of unfairly using Android policies to keep its own search engine on top, Brussels is also accusing the company of offering a cut of search profits to manufacturers and telecoms providers who exclusively install Google’s search engine on their devices.

In a post proclaiming that Android has created more choice, not less, Google CEO Sundar Pichai pointed out that Hey, 11 years ago, Google chose to give away Android. For free. In spite of the ongoing billions it’s cost to build the operating system into what it is today.

We can offer phone makers the option of pre-loading a suite of popular Google apps (such as Search, Chrome, Play, Maps and Gmail), some of which generate revenue for us, and all of which help ensure the phone ‘just works’, right out of the box. Phone makers don’t have to include our services; and they’re also free to pre-install competing apps alongside ours. This means that we earn revenue only if our apps are installed, and if people choose to use our apps instead of the rival apps.

A Google spokesperson told Digital Trends that what’s resulted has been “a vibrant ecosystem, rapid innovation, and lower prices” that don’t add up to an antitrust scenario – rather, they’re “classic hallmarks of robust competition.”

In a move that will shock no one, Google plans to appeal the EC’s decision, Pichai said in a Tweet:

Pichai warned that Wednesday’s decision could lead to either an end to free Android or a more tightly controlled distribution model, such as that of rival phone maker Apple:

We are concerned that today’s decision will upset the careful balance that we have struck with Android, and that it sends a troubling signal in favor of proprietary systems over open platforms.

After all, if Google can’t rely on the revenue stream from Android, that could mean that device manufacturers might, down the line, be faced with paying for Android service – costs that could make for more expensive phones for users.