Google Fined $ 5 Billion 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 on the decision, Vestager said:

Today, mobile Internet accounts for 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 Android device manufacturers and network operators 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 search engine. These practices have deprived rivals of the opportunity to innovate and compete on the merits. They denied European consumers the benefits of effective competition in the important mobile sphere. Google:

• in particular decided that Google:
  • required that manufacturers preinstall the Google search application and the browser application (Chrome), as a condition of licensing for the Google store (the Play Store);
  • made payments to some major manufacturers and mobile network operators on the condition that they preinstall 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 application stores for the Android mobile operating system.

  

  At the press conference, Vestager stated that the Commission had determined that Google had violated its competition rules with Android since 2011. (Although 2013, after being called by the Commission, Google has steadily stopped making illegal payments to device manufacturers to pre-install Google Search exclusively. "The illegal practice has effectively ceased as of 2014," she adds. Manufacturers and network operators using Android have violated the rules of [EU] since 2011, "said Vestager." First because Google's practices have prevented rival search engines from competing on their merits. made the Google search engine pre-installed on virtually all Android devices, which is an advantage that can not be matched.

  "And by doing to major manufacturers and network operators provided that no other search application or search engine "Google practices have also harmed competition and innovation in the mobile space in the sense broad, beyond the simple search on the Internet, and that because they prevented other mobile browsers from competing effectively. with the Google Chrome browser preinstalled.

  "Finally, they hindered the development of Android forks, which could have provided a platform for competing search engines and other application developers."

  She gave the # 39; example of the Android platform of Amazon, Fire OS, as Android platform competes with Google's contractual agreements with device manufacturers.

  "In 2012 and 2013, Amazon has tried to license the device makers for its Android fork, called Fire OS. He wanted to cooperate with the manufacturers to increase his chances of commercial success. And the manufacturers were interested, but because of Google's restrictions, the manufacturers could not launch Fire OS on a single device, "she said.

  " They would have lost the right to sell. " any Android phone. Nowadays, very few devices work with Fire OS. Namely only those made by Amazon themselves. And this is not a proportionate result. Google has the right to define technical requirements to ensure that the functionality and applications of its own Android ecosystem work properly. But these technical requirements can not be used screen to prevent the development of competing Android ecosystems.

  "Google can not have his cake and eat it."

  Vestager also wanted to characterize Google's actions as monopolistic data. "By blocking competing applications and services, it" also denied its competitors access to valuable data from increased traffic, which could have allowed their rivals to find their way around the world. to improve their products. "

  During the press conference It was repeatedly asked whether the dismantling of Google might not be a more effective remedy than the decision to discontinue and withdraw that the Commission has taken today. hui – who entrusts Google with the responsibility to remedy his illegal behavior with Android (though "

  She replied that she was not sure that the dismantling of Google would contribute to effective competition. , arguing that there is "no quick fix to ensure the competitiveness of the markets."

  "We have here a very clear decision that will allow mobile device producers to make a difference. have a choice – c ela will allow us, as consumers, choices as well. This is what makes the competition. And I think it's much more important than a discussion about dismantling a company, "she said, when asked if she would rule out the possibility of dividing Google – so she evaded a direct answer to that.

  "I think that what will serve the competition, is that more players can make a real hit, be able to reach consumers so that we can use our choice to find what is best for us, "she added. "Test new search engines, new browsers, maybe a phone that works differently [via an Android fork] … maybe the entire phone, the way it was presented, that would allow others to compete on the bottom, to show consumers what we can do, what we invented, it is there that we put our efforts, it is the innovation that we want to introduce to you. I think that it would promote competition. "

  She also stressed the importance of adopting European legislation on transparency and fairness for businesses that rely on online platforms.

  "I think that there is a very important discussion discussing how to pbad the law that my colleagues have tabled – a law that will ensure transparency and fairness in relations between the company and the platform, "she said.

  " So, if you are a business oh, my traffic has stopped ", let you know why it happened when it happened and what to do to get your traffic back … Because it will change the market, and it will change the way we are protected as consumers but also as businesses. "

  Google tweeted a first reaction to the decision, claiming that Android has created" a vibrant ecosystem, a quick innovation and less

  A company spokesman confirmed that & # 39; 39, he would appeal the decision of the Commission.

  In a long blog, the CEO Sundar Pichai develops the argument from the company that the Android ecosystem has "created more choice, not less" – wrote for example:

  Today, thanks to Android, there are more than 24,000 devices, at all prices, among more than 1,300 different brands, including Dutch, Finnish, French, German, Hungarian, Latvian, Polish The phones manufactured by these companies are all different but have a something in common – the ability to run the same applications. This is possible thanks to simple rules that ensure technical compatibility, regardless of the size or shape of the device. No phone manufacturer is even forced to sign up to these rules – they can use or edit Android in the way they want, just as Amazon did with its fire tablets and TVs .

  It also has a veiled warning about the consequences If Google's "free distribution" model for Android were to collapse, write:

  Free distribution of the Android platform and the suite of # Google's apps are not only effective for operators and phone operators. . If phone manufacturers and mobile network operators could not include our apps on their wide range of devices, it would upset the balance of the Android ecosystem. Until now, the Android business model has made sure that we have not had to charge phone manufacturers for our technology or to depend on a strictly controlled distribution model.

  . the competition rules in just over a year – and the highest ever issued by the Commission for abuse of dominant position in the market.

  Google was hit in June 2017 with an antitrust sanction of 2.4 billion euros ($ 2.7 billion) another of its products, search comparison service, Google Shopping. 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 an annual business turnover of $ 110.9 billion in 2017. The $ 5 billion fine is therefore equivalent to about half of what the company could have done if the European authorities had imposed the maximum penalty. very serious behavior "

  The Commission stated that the size of the fine takes into account" the duration and seriousness of the offense ".

  She also stated that she had been calculated based on Google's revenue from advertising services on Android devices in the European Economic Area (according to its own guidelines on fines).

  Pressed at the press conference on how the Commission had determined the amount of the penalty, which is Vestager increased the penalty that he inflicted in the case of Google Shopping, highlighting the period during which it occurred, the fact that it has three components and its effect combined with the rise in Google's business.This is a very serious offense.It is a very serious illegal behavior. "

  Google will have three months to pay fine, but confirmed that it iron appealed the decision – and legal wrangling could lead to the process for many years.

  Vestager confirmed that antitrust fines must technically be paid to the EU within three months, they are placed in a closed account until the end of any appeal process – which means that money can not be used meanwhile.

  So, in the case of Android, the will probably be locked until the end of the 2020s – baduming that Google's calls are not successful. If Google does not overturn the Commission's decision in court, Vestager said the money would be returned to the EU member states "using the same key as the contribution to the EU budget".

  "You can impose a fine Someone wrong, you can not impose a fine because you need the money.This would be wrong," she added. "This of course means that it will take some time … if we win in court – and I can badure you that we have done our best to make that possible -, ultimately, the money will come back to the states members to serve European citizens "

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

  that the case against Intel – which was aimed at offering discounts to big buyers – should be sent to a lower court for review, nearly a decade after the initial antitrust decision 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, considering preliminary findings of the Commission and systematically prescriptive remarks from Vestager during what has been a multi-year survey process

  And, indeed, given several EU antitrust investigations in companies and commercial practices of Google (the EU also investigated Google's AdSense advertising service – a separate investigation that Vestager The Commission's earlier finding that Google is a dominant company in Internet research – a judgment rendered at the time of the from its Google Shopping survey last year – is also important, making the final judgment in the Android case more likely because the statute requires Google not to abuse its dominant position on the market. Other markets Vestager insisted that the dominant companies "must be more vigilant" – saying that they have a "special responsibility" to make sure that they do not violate the antitrust rules, and specify that this applies "in the market where it dominates" 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 business as rich as Alphabet, greater risks to its business are the changes that Regulators may require the way that Android works, which could have a lasting impact on Google if they ended up remodeling the competitive landscape of mobile services.

  In Search of a Remedy

  It is the Commission's intention: Reset what has been deemed an unfair competitive advantage for Google via Android, and promote the Competitive innovation as competing products have a chance more just to impress consumers. For example, Vestager asked Vestager if the Commission wanted Google to send push notifications to existing Android users in order to highlight alternatives and thus offer a remedy to consumers who do not. had already been affected by the choice constraints it imposed on device manufacturers and operators.

  "It's up to Google to determine how to lift this responsibility," she told reporters. "It's up to them to do it … Google can make this kind of choice [i.e. sending push notifications] – on this point we have not taken a stand."

  However the popularity and profile of Google services suggest that even if Android users have the choice As a result of a rustproof EU remedy – as a search engine, a service cards, a mobile browser or even an app store to use – most will most likely choose the Google brand offer that is most familiar to them.

  The antitrust remedy could have the opportunity to change consumer habits over time – if, for example, OEMs begin to offer preloaded Android devices with alternative mobile services, increasing the visibility of applications and non-Google services. Which is clearly the hope of the Commission.

  Interestingly, Google has signed deals with Chinese automakers in recent months – bringing its ARCore technology to markets where its core services are being censored and its Play Store is restricted. And its strategy to circumvent 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.

  The plaintiffs in the previous antitrust case Google Shopping of the EU continue to express their dissatisfaction with the outcome of the remedies that Google has put in place on this front. Shivaun Raff, CEO of Foundem, the lead complainant in the Google Shopping business, said, "Fines are in the headlines, effective remedies make a difference."

  So the devil will be in the details of Android remedies that Google offers.

  "The decision forces Google to end its illegal conduct within 90 days in an efficient manner," said Vestager today. "At a minimum, our decision requires that Google stop and not engage in the three types of restrictions I've described." In other words, our decision prevents Google from controlling which search engines and browser applications can be preinstalled on Android devices or what Android operating system they can adopt.But it is Google's sole responsibility to ensure that its driving changes so as to put an end to the infringements. "

  " We will monitor this very closely, "she added, warning that the non-compliance would invite penalty – up to 5% of the turnover. Daily average of Alphabet for each day of non-compliance, date at which nonconformity began. "Our decision forces Google to change its operation and to cope with the consequences of its action."

  Aptoide, one of the original app store complainants – who filed an antitrust complaint with the European Commission in 2014 complaining that Google's policies do not allow all stores alternative apps that competed with the Play Store to be a valid content – welcomed the decision today, albeit cautiously, as a "positive first step". CEO Paulo Trezentos told us: "The EU decision justifying our antitrust arguments is a positive first step, for a more open, competitive and competitive market. decisions that push industries to higher levels and we hope this will help everyone to evolve. "

  On the Google Shopping compliance front, Vestager added a few warning words for Google:" We We have not yet taken a position on Google's compliance with the decision, and since we have not yet done so, this remains an open question. "

  She also stated that the Commission continued to investigate other elements of Google's business practices relating to other vertical search services.

  She added that the investigation was still ongoing and that she continued to be "a priority for us"

  Android as a "Trojan horse" antitrust

  The European Commission announced its official Android survey in April 2015, saying while it was investigating complaints Google was demanding and encouraging OEMs to exclusively install its own services on devices on Android devices, and also was considering whether Google hindered the ability of smartphone and tablet manufacturers to use and develop other OS versions of Android (eg by forcing the open source platform).

  Rivals – grouping under the banner "FairSearch" – complained Google was essentially using the platform as a "Trojan horse" 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 he finally did in November 2016, after obtaining an extension of the Commission's original deadline.

  Flourishing competition?

  In its rebuttal, Google argued that unlike antitrust complaints, Android had created a thriving market. 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 OEMs 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 during today's press conference, Vestager asked Vestager if she feared that the cost of handsets would increase if Google reacted to antitrust recourse by deciding to charge a license fee OEMs to use Android instead of distributing it.

  She highlighted the revenue generated by Google through the Play Store. "The revenue generated is quite substantial, so I think Google still has the opportunity to recover the investment made in the development of the Android operating system," she suggested.

  "I think a number of choices can be made Google and it's up to Google to make those choices," she added. "What we see in general is that competition drives down prices, gives you better choices, so you can get a theory that prices will go up, it's also likely that prices will go down because The thing is now open: there may be competition as to how it should work, and that's the point of the decision. "