EU fines Google $5B over mobile practices

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 choices for consumers.

While Google can easily afford the fine, the ruling could undermine its 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 anticompetitive 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.

Still, some U.S. politicians welcomed the ruling.

Democratic Sen. Richard Blumenthal of Connecticut tweeted that the fine should “be a wake-up call” to the Federal Trade Commission and “should lead US enforcers to protect consumers.” Blumenthal previously called on regulators to investigate how Google tracks users of Android phones.

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, including YouTube, Maps and Gmail, but regulators focused on three that had the biggest market share: Google Search, Chrome and the company’s app store, called Play Store.

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 preinstall the Google Search app.

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

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

Google’s parent company, Alphabet, made $9.4 billion in profit in the first three months of the year and has over $100 billion in cash reserves.

The EU wants to ensure phone makers are free to preinstall 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.