Google fined a record €4.3bn by EU over claims of Android market abuse

Google hit with biggest EU fine since June last year

Google has been fined a record €4.3 billion by the European Union over claims of anti-competitive practices with the Android operating system.

And the fine comes with a demand that the company must discontinue the alleged anti-competitive practices within 90 days. Failure to comply will attract penalties of five per cent of the average daily global turnover of Google's parent company Alphabet, the European Commission warned.

"Our case is about 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," EU competition commissioner Margrethe Vestager claimed in a statement.

Google had "used Android as a vehicle to cement the dominance of its search engine", she said, which had "denied rivals the chance to innovate and compete... They have denied European consumers the benefits of effective competition".

The three restrictions, Vestager added were:

1. Requiring manufacturers to pre-install the Google Search app and Chrome web browser as a condition for licensing the Google Play Store;
2. Making payments to a number of major manufacturers and mobile operators in return exclusively pre-installing the Google Search app on their devices; and,
3. Preventing makers of Android devices from making smartphones running forked versions of Android.

The Commission claimed that the bundling of Chrome with Android was illegal, and had been since 2012 because such bundling can create a "status quo bias", with users likely to stick to the apps that are pre-installed on their devices when they get them.

Google's defence, that such bundling was necessary in order to "monetise its investment in Android" were "not well founded", the Commission claimed. "It would still have benefitted from a significant stream of revenue from search advertising without the restrictions", the Commission argued.

The Commission is arguably on firmer anti-trust ground over the payments that Google had made to manufacturers and mobile operators to exclusively pre-install Google search on all Android devices they offer.

The practice is reminiscent of Microsoft's Windows licensing in the 1990s that required PC makers to pay for a Windows licence for every PC they make, regardless of whether Windows was pre-installed.

That was found to be an anti-competitive practice in both the EU and US. However, that practice had been discontinued from 2014 after Android's dominance had already been cemented.

The Commission also claimed to have found evidence that Google actively prevented manufacturers from making Amazon's Fire smartphone, based on an Android fork and with Amazon's own app store bundled in place of Google's Play Store.

The Commission rejected Google's argument that its strong-arming of manufacturers was beneficial as it would prevent market fragmentation.

It concluded that these practices had prevented rival search engines from competing on Android, and had prevented the development of forks of the Android operating system, stifling innovation.

The fine of €4,342,865,000 was based on Google's revenue from search and advertising services on Android devices, not just across the European Union, but also the European Economic Area (EEA).

The fine is the biggest -anti-trust penalty levied in the European Union since Google was fined €2.1 billion over anti-competitive practices with its Google Shopping service back in June 2017.

It comes one month after Reuters suggested that EU competition commissioner Margrethe Vestager was poised to conclude that Google imposed illegal terms on Android device makers "which harmed competition and cut consumer choice".

The ruling had been expected in June, but was put back to avoid overshadowing President Trump's visit to Europe, and becoming another issue in Trump's claim of unfair US-EU trade.