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Google’s just been hit with a $5 billion antitrust fine, Europe’s biggest ever

July 18, 2018

The European Union’s trustbusters want the search giant to cough up major cash as a penalty for using its Android mobile operating system to stifle competition.
The charge sheet: The EU alleges that Google uses Android, which powers 80 percent of the world’s smartphones, to unfairly favor its own search engine and mobile apps over rivals by:

— forcing phone makers into contracts that require them to pre-install its search service and Chrome web browser on their devices in return for access to its popular Google Play app store and other products.
— making payments to large manufacturers and mobile network operators to get them to pre-install Google’s search engine exclusively on their phones.
— threatening to block phone makers’ access to its app store and search engine if they run versions of Android known as “forks” that haven’t been approved by the company.

Announcing the EU’s decision, Margrethe Vestager, its antitrust chief, said Google must cease its anticompetitive behavior within 90 days or face additional penalties of up to 5 percent of the average daily turnover of Alphabet, its parent company.
Google’s defense: The search behemoth has repeatedly claimed it faces stiff competition—from Apple in particular—and it’s pointed to the fact that phone makers often install competing apps as well as its own as proof it isn’t suppressing competition. Expect it to challenge the EU’s ruling in court.
The EU’s techlash: The whopping fine is part of a broader European push to rein in the massive power of US tech giants. The EU has also:

— hit Google with a $2.7 billion fine in 2017 for unfairly favoring its own price-comparison shopping service over rivals in its search results. (Google is appealing that ruling in court.)
— insisted Apple repay more than $15 billion in back taxes to the Irish government after it unfairly benefited from tax breaks.
— showed it’s willing to listen carefully to complaints from smaller competitors. Aptoide, which runs a rival app store to Google Play, just launched a complaint against Google, claiming the firm has stopped its service from working on some phones and tablets.
Why this matters: The immense power of giant tech companies is a huge concern, as we recently highlighted. So far, Europe has led the way in challenging what it considers abuses of that power. It remains to be seen whether US trustbusters will follow its lead.

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