Google got fined with €4.34 billion yesterday for breaching EU antitrust laws. According to EU, Google has been found guilty of imposing illegal restrictions on Android device manufacturers and network operators, since 2011, in an attempt to get all the traffic from these devices to the Google search engine.
Here’s a tweet from Competition commissioner Margrethe Vestager confirming the penalty.
Fine of €4,34 bn to @Google for 3 types of illegal restrictions on the use of Android. In this way it has cemented the dominance of its search engine. Denying rivals a chance to innovate and compete on the merits. It’s illegal under EU antitrust rules. @Google now has to stop it
— Margrethe Vestager (@vestager) July 18, 2018
Google will now have to end this illegal conduct within 90 days of the decision, says the press release from the regulator. The Commission wants Google to completely stop its engagement in the following types of practices:
- Illegal tying of Google’s apps such as Google Play Store, Google search app and the Google Chrome browser with the device manufacturers.
- Illegal financial incentives conditional on exclusive pre-installation of the Google Search app.
- Illegal blocking of development and distribution of the competing Android operating systems, thereby, preventing device manufacturers from using its alternative version, which is not approved by Google (Android forks). For instance, Amazon’s Android fork, Fire OS, a rival Android platform has suffered greatly from Google’s restrictive contracts with the phone makers.
Apart from engaging in the aforementioned practices, Google is also required to refrain from any measure that has the same effect as these practices. Google’s activities will be watched closely by the commission and Google is under an obligation to comply with EU’s decision.
If Google fails to comply with the decision made by EU, it will further face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet (Google’s parent company).
Sundar Pichai, CEO of Google, has challenged the decision made by the commission in the official press release. Google is now preparing to appeal the decision.
According to Pichai, the decision ignores the fact that Android phones pose tough competition to the iOS phones. He argues that Android has provided a wide scope of choices to a huge number of phone manufacturers, mobile network operators, app developers and billions of users (who are able to easily afford these Android smartphones). This fact has been completely missed by the commission.
He also raises a point saying how history has proved that without the rules set for compatibility, open-source platforms tend to fragment which causes extreme discomfort to the users, developers as well as the phone makers. Google Android’s compatibility rules help avoid this situation and make the platform more reliable for everyone.
“Web browsers such as Opera Mini and Firefox have been downloaded more than 100 million times, UC Browser more than 500 million times” states Pichai. He mentions that “the Commission’s Android decision — ignores clear evidence about how people use their phones today.”
He insists that preventing Google from bundling its apps would “upset the balance of the Android ecosystem” and that the Android business model guaranteed zero charges for the phone makers. This now seems like a warning from Google’s side that its Android business model may consider licensing the popular operating system to phone makers.
Mozilla, on its official blog, openly supported the European Commission’s decision against Google saying that EU’s decision “drives home the importance of true openness in the mobile ecosystem”. It also hopes that the result will “level the playing field for mobile browsers like Firefox, and foster openness to creates and sustain the competition and innovation”.
Many Experts are comparing this case to a previous EU investigation into Microsoft and its desktop web browser. But, Google claims that the two cases are quite different as Android is free, while Microsoft charged for Windows.
At the press conference with the commissioner on the antitrust decision, Vestager was asked about breaking up Google as a better remedy than the current decision made by the Commission. To which Vestager replied “here we have a decision which is very clear, which will allow mobile device producers to have a choice. That will allow us as consumers to have a choice as well. That’s what competition is about. And I think that is much more important than a discussion of whether or not breaking up a company would do that.”
Public opinion about EU’s decision against Google is varied.
I so much love to read comments defending Google, saying that their abuses of dominance are necessary to keep innovating.
— Guillaume Champeau (@gchampeau) July 18, 2018
No monstrous fine or damages claims can undo path dependency created by #Google's practices since 2011/12, but overall @EU_Competition #Android #antitrust decision to be welcomed. Next battle field: Google #playstore as digital essential facility? #Competitionlaw
— Ben Van Rompuy (@BenVanRompuy) July 18, 2018
Unfortunately, this decision of @EU_Commission will probably damage us as a developer company. And it will probably damage the help we try to offer with our #android solutions to more than 4 billion people with hearing loss. #androidworks https://t.co/imuNT9xb8y
— Visualfy (@Visualfy) July 19, 2018
— Paolo Sacconier (@axa1981) July 18, 2018
Google begs to differ. “Today’s decision rejects the business model that supports Android, which has created more choice for everyone, not less. We intend to appeal” says Pichai.