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The EU sanctioned Wednesday Google for abuse of dominant position with a record fine of 4.34 billion euros, the second in a year against which the firm will appeal, the risk of deteriorating a little more relations between Europe and the United States
The amount of this fine breaks all records. It punishes the American company for abusing the dominance of Android, its free operating system for Smartphone, to establish the supremacy of its online search service. "Google has used illegal practices to cement its dominant position in internet research," EU Competition Commissioner Margrethe Vestager told a news conference in Brussels. "Google's search engine is its flagship product, and each year Google generates more than $ 95 billion in revenue from the ads shown and clicked by Google Search users, and much of its revenue is due to the rise in mobile devices like smartphones and tablets, "added the Danish commissioner. A little more than a year ago, on June 27, 2017, the company had already been sentenced by the European Commission to pay a fine of 2.42 billion euros for abusing its dominant position in research into line by favoring its "Google Shopping" price comparison, to the detriment of competing services. The amount of the fine is decided at the last moment and can reach theoretically, according to the rules of the European competition, up to 10% of the total turnover of the company which rose for Alphabet, parent company of Google , at $ 110.9 billion in 2017 (94.7 billion euros).
"Never the right time"
The European Commission has ordered the American company "to put an end to its illegal practices within 90 days, on pain of being penalized by up to 5% of the figure. Global Average Daily Alphabet Business ". "Today, the Commission decision rejected the economic model that makes Android live (…) That's why we will call" reacted Google CEO Sundar Pichai in a blog post. This new sanction against the American giant comes in a particularly tense context between the EU and the United States, with whom there is no shortage of friction on NATO or trade. In a week to the day, European Commission President Jean-Claude Juncker is due to go to Washington to try to defuse the trade dispute between the EU and US President Donald Trump, ready to tax European car imports in his country. Asked about the appropriateness of a sanction of such an important in such a context, Mrs. Vestager answered: "It will never be the right moment". The Danish commissioner assured that she had no resentment against the United States that she "likes very much" in response to the assertions made to President Donald Trump. Android – operating system used for 80% of devices in Europe and around the world, which is the equivalent of the iOS for the Apple iPhone – has been in the European Commission's sights for several years. [19659002]
Multiple Grievances
In its press release, the institution detailed its grievances against Google. First, the California group has required manufacturers to pre-install the Google Search app and browser (Chrome) as a condition of licensing its online store (Play Store).
Second, it has paid some major manufacturers and some major mobile network operators to pre-install the Google Search app exclusively on their devices. And third, it prevented manufacturers wishing to pre-install Google applications from selling even one smart mobile device running on other versions of Android not approved by Google. In the case of Shopping, Google proposed remedies in September 2017. They are still under review by the European Commission. The group had also lodged an appeal with the EU Court of Justice (CJEU). Given the complexity of the Shopping and Android business, it will take two years for the Court to make a decision.
The amount of the fine will be placed in the form of a bank guarantee and if the justice confirms the sanction, it will be returned to the Member States in proportion to their contribution to the European budget, said the Commissioner. The European Commission has a third fire against Google: it criticized since July 14, 2016 for abusing its dominant position with its AdSense advertising agency (80% of the market in Europe) by artificially limiting the possibility for websites third parties to display contextual advertising from competitors. Here too, a fine could emerge.
Google is not the first company in Silicon Valley sanctioned by Ms. Vestager: Apple was ordered in 2016 to repay Ireland 13 billion tax arrears and Microsoft was fined 497 million euros in 2004 for refusing to provide complete technical documentation to its competitors so that they could design software fully compatible with the Windows operating system.
A mobile operating system
San Francisco – Google reigns on operating systems for mobile devices with its Android system, present in tablets, watches and especially smartphones. The operating system is what makes the device "run", which makes a computer work like Windows for Microsoft. According to the Gartner consultancy, the Android system, created in 2007, is arch-dominant in the world of smartphones, with a market share of around 85.9% (2017 figure), against about 14% for iOS, the Apple operating system that runs iPhone and iPad, and 0.1% for "other operating systems". More than 1.3 billion Android smartphones were sold in 2017, compared to around 215 million for iOS, and 1.5 million for other operating systems. Android is an "open source" operating system – unlike Apple-controlled iOS – which means that different manufacturers can integrate it into their devices without paying a license.
"All world, including Android's competitors, can choose to download, install, modify and distribute its + + source code for free "to" develop applications, mobile devices and even other operating systems, "argues the site Android internet. Specifically, unlike iOS, which only equips Apple devices, Android is integrated into devices from different manufacturers, including South Korean Samsung, the world leader in smartphones. However, to avoid too much disparity and ensure that different applications are compatible with different models of Android devices, Google has signed with external players (manufacturers, application developers …) compatibility agreements (" Google's voluntary compatibility agreements "). Android claims that no manufacturer is obliged to install by default Google applications (Chrome, Maps, Gmail etc.) If the manufacturer or the mobile operator nevertheless decides to pre-install in its devices -this is almost always the case considering the popularity of these applications- it is possible for them to pre-install also other competing applications. For example, a Samsung smartphone can indeed both pre-install Google Search and another Internet search engine or its app store Store Store and that of Samsung Galaxy Apps.
However, explains Android, " If manufacturers want to pre-install Google apps, they need to install the package called + Google Mobile Services (GMS) +, because apps have been designed to work together ", which allows the user, for example, to save a photo you've received in your Gmail box to (Google) Photos or open an attachment you've received via email in Drive, Google's online storage system. GMS is, in turn, subject to licensing and therefore fee. GMS contains many applications: Search, Chrome, Play Store, Play Music, Play Movies, Drive, Photos, Maps, Gmail, Hangouts, YouTube … Google also earns revenue directly from most of these apps because they contain advertising and because some have paid versions, like YouTube Premium or for example Drive, if one wants to increase the volume of storage online. Google's parent company, Alphabet, never gives separate financial data on Android.
Trump rises
The US president, Donald Trump, once again took the European Union Thursday, protesting this time against the record fine imposed by Brussels Google and hammering that he would no longer tolerate Europe taking advantage of the United States. "I told you so," tweeted the White House tenant. "The European Union has just fined five billion dollars to one of our great groups, Google," he added. "They really benefited from the United States, but it will not last!" The EU imposed Wednesday a fine of 4.34 billion euros on Google for abuse of dominant position. This new conflict between European politicians and one of the largest US companies comes as disputes between the United States and the European Union, on topics such as trade and NATO. It is in this tense context that the President of the European Commission, Jean-Claude Juncker, will meet President Trump in Washington on July 25 with the aim of defusing the trade conflict that is threatening to worsen. Donald Trump recently said that the EU is an "enemy" of the United States commercially. After punitive tariffs imposed in June on European steel and aluminum, the Republican president is now ready to tax US imports of cars produced in the EU. In retaliation, Brussels decided to heavily tax a list of iconic American products, such as jeans, Harley-Davidson motorcycles and peanut butter. Fiercely opposed to the European system, Donald Trump recently advised Theresa May to sue the EU for a successful Brexit, according to the British Prime Minister.
Since coming to power, his administration has challenged the model of multilateralism traditionally relied on by the United States, both in the political and economic sectors.
"We do not like infinite talk, we prefer bilateral action to negotiate, multilateral meetings take a lot of time and we feel a sense of urgency," the US Secretary of Commerce said in May. , Wilbur Ross.
The top 5 Brussels fines
Here are the top 5 fines imposed by the European Union on companies for abuse of dominant position.
1 – Google (2018): 4.34 billion euros
The US giant was sentenced Wednesday for taking advantage since 2011 of the dominant position of its operating system for smartphones and tablets, Android, so to establish the supremacy of its own applications, especially its online search service, by requiring mobile device manufacturers to install them.
2- Google (2017): 2.42 billion
The Mountain View firm had already been condemned for having abused from 2008 its arch-dominating position in Internet research in order to favor its service of comparison of price "Google Shopping" at the expense of its competitors. Google has appealed.
3- Intel (2009): 1.06 billion
The computer chip manufacturer was accused of having implemented between 2002 and 2007 a strategy to exclude from the market its only serious competitor, AMD. The abuse included rebates for computer manufacturers to purchase almost all their processors from Intel. European justice decided in September 2017 to re-examine the case.
4- Qualcomm (2018): 997 million
The US IT provider was sentenced in January 2018 for "paying billions of dollars" to its Apple customer between 2011 and 2016, so that it could not not supplying to his rivals.
5- Microsoft (2004): 497 million
The IT group has been fined for refusing to provide complete technical documentation to its competitors so that they can design software that is fully compatible with the system Windows operating system. He was also accused of linking the sale of Windows with its media player Windows Media Player, to oust the competition. This ranking does not take into account the fines imposed on undertakings that had made commitments to the EU to end an abuse of a dominant position and that did not hold them, or did not comply with the requests from Brussels. This is the case for example of Microsoft, sentenced to 899 million euros fine – then reduced to 860 million – in 2008 and to 561 million euros fine in 2013. The tax benefits granted by Member States some companies, which have resulted for example in imposing on Apple to repay 13 billion euros to Ireland in 2016, belong to another category, that of state aid.
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