The European Union fined Google a whopping $5 billion recently for breaking the EU’s antitrust laws in the mobile industry; this is the biggest antitrust fine the EU has ever levied at a company and is a result of a three year long investigation.
The EU stated that Google uses the fact that its Android mobile system is so highly preferred in the market to force handset makers to sell their devices with Google Apps pre-installed which hence limits customer choice quite a lot. Google does this by making it compulsory for Smartphone manufacturers to have its apps installed or they won’t be able to access the Google Play Store which is almost a necessity in android phones.
EU Competition Commissioner Margrethe Vestager (@vestager) tweeted on 18th July:
“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”
Google immediately responded that it would appeal. “Android has created more choice for everyone, not less,” said company spokesman Al Verney.
The EU aims to provide phone makers with the freedom to pre-install apps of their choosing and allow for competition in services such as internet search since currently Google is the most used search engine. It also wants them to be able to more easily use altered or “fork” versions of Android.
With technology quickly taking over modern, everyday life, European regulators have begun to crack down on laws and companies concerning it. In June of last year as well they fined Google $2.8 billion (€2.42 billion) for favouring its shopping listings in search results.
This antitrust case however has had a much farther reaching impact beyond this however.
“The important thing is not to be distracted by the size of the fine, what is important is that Google has to change its abusive behaviour,” Rich Stables, CEO of the rival search engine Kelkoo, told The Associated Press.
Google argued that that could hinder its ability to provide Android for free as its main form of revenue from the operating system is through advertising and the sale of content.
Daniel Castro, vice president of the Information Technology and Innovation Foundation said the ruling “is a blow to innovative, open-source business models.”
The EU’s crackdown on Google is extremely similar to its past clash with Microsoft in which they claimed Microsoft took advantage of the high market demand of its Windows OS to make consumers to use Microsoft’s own browser, Internet Explorer. Microsoft was also fined and forced to give users a more explicit choice of browsers.
The Google crackdown also comes at a sensitive time for Europe’s international relations with the US. The US has complained that the EU has mainly targeted US companies including also Apple and Amazon for breaking competition or tax rules.
“We have to protect consumers and competition to make sure consumers get the best of fair competition,” Vestager said. “We will continue to do it, no matter the political context.”