Brussels has hit Google with a €4.3bn fine, imposing a record penalty on the US group for abusing its dominant position in the Android operating system for mobile phones.
The European Commission finding is the most consequential decision made in its eight-year antitrust battle with Google. The fine significantly outstrips the €2.4bn charge Brussels imposed on the company last year for favouring its own site in comparison shopping searches.
The decision takes aim at a core part of Google’s business strategy over the past decade, outlawing restrictions on its Android operating system that allegedly entrenched Google’s dominance in online search at a time when consumers were moving from desktop to mobile devices.
Android is the operating system used in more than 80 per cent of the world’s smartphones and is vital to the group’s future revenues as more users rely on mobile gadgets for search services. Google has denied wrongdoing.
The commission found that Google had used illegal “tying” methods to force phonemakers to pre-install Google services and apps, such as search and Chrome, as a condition of using Google Play, the smartphone app store. It also determined that mobile operating networks and device manufacturers were also paid anti-competitive financial incentives if they pre-installed Google search and no other rival services.
Margrethe Vestager, the EU’s competition commissioner, said Google had imposed illegal conditions on Android device manufacturers “to ensure that traffic on Android devices goes to the Google search engine”.
“In this way, Google has used Android as a vehicle to cement the dominance of its search engine,” Ms Vestager said. “These practices have denied rivals the chance to innovate and compete.”
A third leg of the case relates to contractual restrictions that stopped manufacturers from selling phones using rival operating systems developed on the Android open source code.
Under such antitrust decisions, Google would be expected to end the illegal practices, forcing amendments to its operations that could have implications for its future standing in the market for mobile and other devices.
The commission has concluded the illegal practices consolidated Google’s dominance in general search, limited the ability of rival mobile browsers to compete with its Chrome browser and obstructed the emergence of other operating systems, people briefed on the decision said. The €4.3bn fine was first reported by Bloomberg.
Google argues the commission has misunderstood consumer behaviour and wrongly defined the market, excluding Apple as a competitive rival.
“The commission’s case is based on the idea that Android doesn’t compete with Apple’s iOS. We don’t see it that way,” said Kent Walker, Google’s general counsel. “We don’t think Apple does either. Or phonemakers. Or developers. Or users.”
Google also argues rival apps are only one download away, making it impossible to shut out competitors even when Google apps are pre-installed or bundled on phones. It depicts the licensing terms as minimum requirements to ensure Android works smoothly on different devices.
The Android case is one of three antitrust investigations pursued by Ms Vestager against Google. These began eight years ago with an investigation into comparison shopping, a relatively narrow part of online commerce.
The case concluded with a €2.4bn fine and Google is attempting to convince Ms Vestager the changes it made to business practices ended the competition problems. A third probe is examining whether the company unfairly banned rivals from websites that used its search bar and adverts.
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