EU fines Google $5B for forcing their own apps

BRUSSELS — European regulators came down hard on another U.S. tech giant Wednesday, fining Google a record $5 billion for forcing cellphone makers that use the company’s Android operating system to install Google search and browser apps.

The European Union said Google’s practices restrict competition and reduce consumer choices.

While Google can easily afford the fine, the ruling could hurt the company’s business model, which relies on giving away its operating system in return for opportunities to sell ads and other products.

Google immediately said it will appeal, arguing that its free operating system has led to lower-price phones and created competition with its chief rival, Apple.

Android has “created more choice for everyone, not less,” Google CEO Sundar Pichai tweeted.

The fine, which caps a three-year investigation, is the biggest ever imposed on a company by the EU for anti-competitive behavior.

It is likely to stoke tensions between Europe and the U.S., which regulates the tech industry with a lighter hand and has complained that the EU is singling out American companies for punishment.

In its ruling, the EU said Google broke the rules by requiring cellphone makers to take a bundle of Google apps if they wanted any at all.

The bundle contains 11 apps in all, including YouTube, Maps and Gmail, but regulators focused on three that had the largest market share: Google’s Search and Chrome apps, and its Play Store app marketplace.

The EU gave Google 90 days to come up with remedies that could allow rival search apps and browsers onto more phones. Failure to comply risks a further penalty of up to $15 million a day.

The EU also took issue with Google’s payments to wireless carriers and phone makers to exclusively pre-install Google Search.

It ruled, too, that Google broke the law by forcing manufacturers that took its apps to commit to not selling devices that use altered versions of Android.

EU Competition Commissioner Margrethe Vestager said “companies must compete on their merits,” playing by rules that favor consumers and open markets.

Vestager said that given the size of the company, the $5 billion euro fine is not disproportionate.

The penalty is on top of $2.8 billion that regulators imposed on Google a year ago for favoring its shopping listings in search results.

Android is an open-source operating system that Google lets cellphone makers use for free. As a result, it is the most widely used system, beating even Apple’s iOS.

The EU wants to ensure that phone makers are free to pre-install apps of their choosing. It also wants cellphone makers to be able to more easily use altered versions of Android, like Amazon’s Fire OS.

Google argues that letting phone makers choose their apps could hurt the company’s main means of making money through Android — advertising and the sale of content and apps. Apple, in contrast, makes most of its money from the sale of devices.

Giving phone makers more freedom to use altered versions of Android could also hurt Google. Samsung, a hugely popular maker of Android phones, could break off and take much of the Android system with it.