Google smacked with $7.4b Android fine by the EU
The EU has unleashed its most forceful attack yet in an escalating conflict with Silicon Valley by hitting Google with a record-breaking monopoly abuse fine.
Margrethe Vestager, the European competition chief, ordered the American internet giant to pay a ¤4.34 billion ($7.45b) penalty after finding it had illegally bound smartphone manufacturers to deals that forced them to install Google apps.
It is the second multi-billion euro fine Brussels has ordered Google to pay in little more than a year, and provoked outrage in the technology industry.
Sundar Pichai, Google’s chief executive, warned that the decision “sent a troubling signal” that could lead to the company charging for its Android software.
The Information Technology and Innovation Foundation, a Washington-based group that represents major technology companies, attacked the fine as “misguided and short-sighted”.
“[The fine] merely fills European coffers at the expense of American companies,” said the ITIF’s Daniel Castro. He added that “it is time for European regulators to reset their approach to competition policy”.
The European Commission has spent three years investigating claims that Android’s dominance helps Google crush rival search engines and competitors to its Chrome web browser.
Almost 80 per cent of the hundreds of millions of smartphones sold in Europe, which are made by manufacturers including Samsung, LG and Huawei, run on Android. Google develops the software and gives it away for free, but binds phone makers to strict conditions that ensure the vast majority of Android phones come loaded with Google’s own apps including its dominant search service.
Vestager accused Google of using Android as a “vehicle to cement the dominance of its search engine”.
“These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere,” she said.
Vestager, who has also demanded that Amazon, Apple and Facebook pay fines or unpaid taxes in recent years, denied that Brussels was targeting US companies. “I very much like the US,” she insisted. “This has nothing to do with how I feel. Nothing whatsoever.”
But France applauded the fine, calling it an “excellent decision”. A French Government spokesman said: “No one is above the laws that have been laid down in common for all.”
The EU has fought an eight-year battle with Google that has resulted in two major fines for the company, with one investigation still open.
Last year it ordered the company to pay ¤2.4b for using the dominance of its search engine to promote its internet shopping service. A third case, into the company’s online advertising network, is expected to result in another financial penalty.
As well as the fine, Vestager gave Google 90 days to break the contracts that lead phone manufacturers to install its apps. If the company fails to do so, she can continue to impose fines worth 5 per cent of its daily turnover.
Google vowed to appeal against the ruling. “The commission’s Android decision ignores the new breadth of choice and clear evidence about how people use their phones today,” Pichai said.
“The decision rejects the business model that supports Android, which has created more choice for everyone, not less.”