Google hit with record European Union fine

Sean Reid
July 19, 2018

Google is braced for a record fine over its Android operating system in the coming hours from the EU.

Regulators create antitrust laws to prevent companies from abusing their position of power to restrict competition.

The European Commission stated two years ago that the need to have Google Play Store on Anroid phones denies rivals such as Microsoft's Bing search engine, the chance to strike deals with smartphone companies to have its search engine installed, an accusation that Google has denied. They have denied European consumers the benefits of effective competition in the important mobile sphere.

The source said Competition Commissioner Margrethe Vestager would confirm the antitrust fine, which is almost double the previous record 2.4 billion euro fine which the United States tech company received a year ago over its online shopping search service.

Android has "created more choice for everyone, not less", Google CEO Sundar Pichai tweeted.

Pichai asserts that the EC failed to consider that Android does have at least one major competitor in the mobile market: Apple's iOS.

Google also highlights that a typical Android smartphone comes with over 40 apps pre-installed from different developers. Also true. What he doesn't address is how not agreeing (and thereby missing out on the Google payout and losing the right to install the Play Store) might affect that manufacturer's business.

A third European Union case against Google, which has not yet concluded, involves its AdSense advertising service which is accused of blocking users from displaying search advertisements from Google's competitors.

Alphabet, which is scheduled to report financial results on Monday, said it would set aside money to pay the fine which would cut its second-quarter profit by about US$5 billion.

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.

"From a debundling impact perspective on the business, we expect minimal impact as the consumer is likely to just simply download the apps for Google's services if and when they get new Android phones-much as they already do when they get new iPhones", Stephen Ju, a Credit Suisse analyst, wrote in a report.

The EU also took issue with Google's payments to wireless carriers and phone makers to exclusively pre-install the Google Search app.

He also defends the company's app bundling, arguing it's easy for users to install alternatives if they don't want to use Google's pre-installed options.

The EU fined Google $2.8 billion dollars in June of 2017 over how it its search engine provided shopping lists.

According to the commission, Google illegally obstructed development and distribution of competing Android operating systems., as in order to be able to pre-install on their devices Google's proprietary apps, manufacturers had to commit not to develop or sell even a single device running on an Android fork.

Other reports by

Discuss This Article