Google fined $ 5 billion from the EU for antitrust abuse on Android – TechCrunch

Google was fined a record 4.34 billion euros by European antitrust regulators for abusing the dominance of its Android mobile operating system.

Competition Commissioner Margrethe Vestager tweeted the penalty before a press conference about to take place. Stay tuned for more details when we receive them.

In a longer statement about the decision, Vestager said: "Today's # Now, the mobile Internet is making more than half of the global Internet traffic.This has changed the lives of millions of Europeans.Our case concerns three types of restrictions that Google has imposed on manufacturers of mobile phones. devices and operators of Android networks to ensure that traffic on Android devices goes to the Google search engine.In this way, Google has used Android as a way to cement the dominance of its engine of These practices have deprived rivals of the opportunity 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 the antitrust rules of the "EU."

In particular, the EC decided that Google:

• asked the manufacturers to pre-install the Google Search app and the browser application (Chrome) store (the Play Store);
• made payments to some major manufacturers and operators of mobile networks provided that they preinstalled exclusively the Google Search app on their devices; and
• prevented manufacturers wishing to pre-install Google applications to sell even a single smart mobile device running on alternative versions of Android that have not been approved by Google (the "Android forks" ).

concludes that Google is dominant in the general Internet search services markets; licensed mobile smart operating systems; and the application stores for the Android mobile operating system.

Google tweeted a first reaction to the decision, claiming that Android has created "a vibrant ecosystem, rapid innovation and lower prices."

The fine is the second major sanction for the advertising technology giant for violating the EU's competition rules in just over a year – and the most high ever issued by the Commission for abuse of a dominant market

In June 2017, Google was hit with an antitrust penalty of 2.4 billion euros (~ 2.7 billion euros). dollars) at the time, linked to another of its products, the Google Shopping search comparison service. The company has since made changes to the way it displays search results for products in Europe.

According to the rules of the Union, companies can be fined 10 percent of their overall revenues if they are found to have violated European competition law. ] The parent entity of Google, Alphabet, has recorded a business turnover of $ 110.9 billion in 2017. The fine of $ 5 billion therefore represents about half of what the Company could have done if the European regulators had imposed the maximum penalty.

the size of the fine takes into account "the duration and seriousness of the offense". It also stated that it was calculated on the basis of the value of revenue generated by the advertising services on Android devices in the European Economic Area (according to its own guidelines on fines).

Google will have three months to pay the fine is likely to appeal – and legal wrangling could cause the process for many years. Although if it does not pay fine within this time frame, penalties up to 5% of the company's average daily business figure can be applied.

We contacted Google for their reaction.

The Commission 's record pair of fines for Google products, its highest antitrust sanction is a fine of 1.06 billion euros for the Intel chip maker in 2009.

Yet last year, the highest European court ruled it focused on offering discounts to high volume buyers – should be sent to a lower court for re-examination, nearly a decade after the antitrust decision d & # 39; origin. Google's lawyers should therefore be ahead in their next European antitrust battle.

The most recent EU fine for Android has been under consideration for more than two years, given the Commission's preliminary findings and Vestager's systematically prescriptive remarks during what has been a very difficult process. multi-year survey

And, in fact, given several EU antitrust investigations into companies and Google's business practices (the EU also investigated Google's AdSense advertising service). The Commission's prior finding that Google is a dominant Internet search firm – a judgment reached at the conclusion of its Google Shopping survey last year – is also important, making the final judgment in the Android case more likely because the abuse of its dominant position in other markets, adjacent or not.

Google Shopping penalty announcement last summer, Vestager insisted that the dominant companies "must be more vigilant" – saying that they have a "special responsibility" for it. ensure that they do not violate antitrust rules, and that it applies "in the market where it is dominant" and "in any other market". This means – as here in the case of Android – mobile services.

A single financial penalty, even if it amounts to several billion dollars, can only cause lasting damage to a company as rich as Alphabet, the changes that regulators can impose on how Android runs can have a lasting impact on Google if they end up reshaping the competitive landscape of mobile services.

This is at least the Commission's intention: has been deemed an unfair competitive advantage for Google via Android, and promote competitive innovation because competing products have a more fair chance of Impress consumers.

However, the popularity and profile of Google services suggest that even though Android users result from a rust-proof EU remedy – including a search engine, a map service, a mobile browser or even an app store to use – most will probably choose Google's offer. That said, an antitrust remedy could have the opportunity to change consumer habits over time – if, for example, OEMs start offering preloaded Android devices with alternative mobile services, increasing visibility. It is interesting to note that Google has entered into agreements with Chinese OEMs in recent months to introduce ARCore technology into markets where its core services are censored and its Play Store limited. And its strategy to bypbad regional restrictions in China by working more closely with device manufacturers can also be part of a plan to guard against new regulatory restrictions placed on Android elsewhere.

Although the plaintiffs in the previous antitrust case Google Shopping of the EU continue to express their dissatisfaction with the result on this front. And in a statement responding to news that another EU antitrust sanction was going on for Android, Shivaun Raff, CEO of Foundem, the lead claimant in the Google Shopping business, said: " Fines make headlines Effective remedies make a difference. "

So the devil will be in the details of remedies.

Android as an antitrust Trojan

The European Commission officially announced its in-depth investigation on Android in April 2015, saying while it was investigating complaints that Google "required and incentivized" OEMs to exclusively install their own services on devices on Android devices, and also examine whether Google hampered the ability of smartphone and tablet manufacturers to use and develop other OS versions of Android (for example by forcing the open source platform)

& # 39; FairSearch & # 39; – complained that Google was essentially using the platform as a "Trojan" & # 39; to unfairly dominate the mobile web. The lobby listing on the EU Transparency Register describes its intention to promote "innovation and choice over the Internet ecosystem by promoting and defending competition in online research." and mobile within the European Union "and appoints its member organizations: Buscapé, Cepic, Foundem, Naspers, Nokia, Oracle, TripAdvisor and Yroo.

On average, Android has about 70-75% of smartphone market share across Europe. But in some European countries, the operating system represents an even higher proportion of use. In Spain, for example, Android took a market share of 86.1% in March, according to market data collected by Kantar Worldpanel.

In recent years, Android has further increased its market share in some European countries. Last year, Google reached a $ 7.8 million settlement with the Russian antitrust authorities on Android – forcing the company to no longer require the exclusivity of its apps on devices Android in Russia; could not restrict the pre-installation of search engines and competing applications, including on the home screen; could no longer require Google Search to be the only pre-installed general search engine.

Google also agreed with the Russian antitrust authorities that it would no longer comply with its previous agreements when the handset manufacturers had agreed to one of these conditions. In addition, as part of the settlement, Google was to allow third parties to include their own search engines in a choice window and allow users to choose their preferred default search engine in a displayed choice window. in Google's Chrome browser. The company was also to develop a new Chrome widget for Android devices already in use in Russia, to replace the standard Google search widget on the home screen to give them a choice when it was launched.

A year after Vestager's public announcement of the EU antitrust investigation on Android, she issued an official statement of objections, saying that the Commission felt that Google has " implemented a strategy on mobile devices to preserve and strengthen its dominance in general internet search "; and report as problematic the difficulty for Android users whose devices are pre-loaded with the Google Play Store to use other application stores (which can not be downloaded from Google Play.)

provided that Google search is preinstalled as an exclusive search provider. "In our opinion, as we see now, it prevents competition because of the strength of the financial incentive," Vestager said in April 2016.

Google has given several months to formally respond to antitrust charges Android – what she finally did in November 2016, having obtained an extension of the Commission's initial deadline.

In its rebuttal, Google argued that unlike antitrust complaints, Android had created a thriving and competitive mobile application ecosystem. He added that the EU ignored the relevant competition in the form of iOS's competing iOS platform – although OSO does not have a dominant market in Europe, nor that Apple has a dominant corporate status in European markets.

its "voluntary compatibility agreements" for Android builders are a necessary mechanism to avoid platform fragmentation – which would make life more difficult for application developers – as well as its Obligation for Android builders to use the default Google search. payment to provide the suite for free to the device manufacturers (since there is no formal license fee for Android).

"Free Distribution is an effective solution for everyone," arguing that it lowers prices for phone manufacturers and consumers, while continuing to support our substantial investment in Android and Play.

In addition, Google sought to qualify open source platforms as "fragile" – arguing that the Commission's approach was likely to upset the "balance of needs" between users and consumers. developers and suggest that open platforms. "