Computers

Why the EU just fined Google over 4 billion euro

Why the EU just fined Google o...
The EU has hit Google with a fine for alleged breach of EU antitrust rules in relation to its Android operating system business practices
The EU has hit Google with a fine for alleged breach of EU antitrust rules in relation to its Android operating system business practices
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The EU has hit Google with a fine for alleged breach of EU antitrust rules in relation to its Android operating system business practices
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The EU has hit Google with a fine for alleged breach of EU antitrust rules in relation to its Android operating system business practices

In a decision years in the making, the European Union's Antitrust Commission has fined Google €4.34 billion (US$5 billion) for illegal practices that have been deemed to breach EU antitrust rules. The fine relates to what the EU sees as Google's use of its Android operating system to restrict competition.

The Commission opened its formal investigation into Google's Android business practices over three years ago after two complaints and an initial investigation. The allegations were that Google abused its dominant market position and hindered the development of market rivals by requiring smartphone and tablet manufacturers that utilize its Android operating system to exclusively pre-install several of Google's own applications or services.

A separate EU investigation by the Commission culminated in 2017 with a €2.42 billion (US$2.7 billion) fine alleging Google breached antitrust rules by promoting its own comparison shopping service in its search results. That verdict is still moving through an appeals process.

This latest decision, and fine, addresses a whole other side of Google's business practices, its Android strategy. The Commission found that the company engaged in three separate practices that were deemed to violate antitrust rules.

First, the company is alleged to have illegally tied its search and browser apps to all Android devices and that part of the Android licensing conditions required manufacturers to pre-install certain apps. To this point, Google has responded by arguing apps such as Google Play ensure phones work "out of the box," and because Google offers Android to phone makers for no cost, it is not unreasonable to include apps that generate revenue for the company.

The second illegal practice alleged by the Commission is that Google offered financial incentives to major device manufacturers to ensure Google Search was exclusively pre-installed in Android devices. Google's response to this point was that these practices (alleged to have occurred in 2011 and 2014) were necessary at the time in order to convince manufacturers to use the Android ecosystem.

The final practice the Commission suggested Google had engaged in was obstructing the development of competitor's Android operating systems. It was claimed that Google would not allow any of its proprietary apps to be pre-installed on devices that utilized alternate iterations of Android. This meant that the development of competing versions of Android was stifled, with the Commission pointing to an iteration of Android developed by Amazon, called "Fire OS", as an example of this.

Google argued that these restrictions were vital to prevent the Android ecosystem from "fragmenting" and becoming riddled with technical failures, but the Commission claimed the company did not provide any credible evidence to validate this argument.

In a general response to the massive EU verdict Google's CEO, Sundar Pichai, has suggested that all of the company's decisions regarding Android operations have been with the goal of creating more choice, and not less. Pichai argues that some rules have been absolutely necessary to make sure the operating system maintains its overall functionality.

"To be successful, open-source platforms have to painstakingly balance the needs of everyone that uses them," Pichai writes. "History shows that without rules around baseline compatibility, open-source platforms fragment, which hurts users, developers and phone makers. Android's compatibility rules avoid this, and help make it an attractive long-term proposition for everyone."

So what happens now?

According to EU protocol, Google has 90 days to "bring its illegal conduct to an end in an effective manner." If it does not comply within that period of time further fines may be instituted that equal up to five percent of the daily worldwide turnover of Alphabet, Google's parent company. As well as appealing the fine, Google is suggesting that it will have to reconsider its Android business model, which up until now has been delivered to phone manufacturers for no fee.

How this will all play out in the long term is still yet to be seen. A few billion dollars certainly won't cripple a giant like Google, but it highlights the European Union's growing concern with big tech companies dominating our increasingly interconnected world.

Source: European Commission

8 comments
dresden455
I'm sorry, but that's kind of ridiculous. Android is a Google product. They can package what they want. By this logic shouldn't Microsoft be fined trillions for bundling internet explorer and Office products for 30 years? Also, specifically regarding part about not allowing their software, which is proprietary and not open source, to be installed on non Google forks: they didn't allow their software to be PRE-installed. You can get the software afterward. Additionally, isn't this contradicting their first point? They stifled by installing their software, but also stifled by not installing it?
Pablo
They better line up the rest, particularly the richest company on the planet... they’ve been foisting stuff like this off for years. At least Android’s offerings work.
Daishi
It's kind of hard to call them a monopoly when the companies they are talking about Apple and Amazon. I agree with resden455 on the point about Google mandating inclusion of their software when CyanogenMod and other platforms based on Android had the opposite problem of not being able to ship with Google services/apps. I think you are welcome to use the code and to leave Google services out of the build so long as you don't call it "Android" which seems fair to me. It's far more open than Apple's iOS. If the EU wants to aggressively punish the companies that develop intellectual property all it's going to do is accelerate the speed that China rises in the industry.
EZ
I have 2 older phones that I would like to use as music players and camera but can't because Google maintains control over them. They have clandestine programs embedded in them that continue bugging me to update, screws with my music player, etc. I hope they are able to make Google and all the other digital monopolies feel our pain. We are all suckers for giving them possession of our thoughts and activities in the first place but maybe a compromise can be reached in the future.
ljaques
Google didn't build in apps and prevent people from uninstalling them, as MS did with Internet Explorer. Offering free software and paid companies for pre-installing some others, also free. Phone owners can remove them and put in anything else they wish. I see absolutely no anti-trust actions by them. Besides, with Apple iOS, Google Android, Research in Motion's BlackBerry OS, Nokia's Symbian, Hewlett-Packard's webOS (formerly Palm OS) and Microsoft's Windows Phone OS all in play, who's monopolizing what? The EC (well, most of the EU "leadership") is just looking for extra cash to fund its social cloister fugue experiments.
christopher
I love this arrogance: "these practices were necessary at the time in order to convince manufacturers to use the Android ecosystem." ... and they are no longer necessary of course, because those practices have crushed all their competition out of the running. FireOS was awesome, and (no doubt to the horror of google) supported a lightweight and secure app mechanism that didn't require all the heavy tooling and other hassle involved with the google play. Android is not a "Google Product", it is linux, with modifications applied by Google.
rude.dawg
Totally agree with points raised by dresden455, pABLO, Daishi and ljaques. Could this move by the EU against Google be a politically-motivated stunt in order to challenge the US's threats to impose reciprocal tariffs on EU items?
YuraG
The Economist got a few good articles on the subject, that is written by well-informed neutral journalists. But I'll stray a bit and conclude when monopolies and populists rise it's the least powerful who suffer.