Google fined $5 billion by EU in antitrust case
European regulators on Wednesday fined Google a record $5 billion for the way it bundles apps on Android, the most widely adopted mobile operating system in the world.
Margrethe Vestager, the European Union’s competition chief, ordered the tech giant to cease pushing its own search and Webbrowsing tools on smartphones and tablets running its Android mobile operating system. She faulted Google for using Android as a means to solidify its strong foothold in search, while making it harder for rivals to offer competing apps and services.
Google must “bring its illegal conduct to an end” within 90 days, Vestager said, or face additional fines from the EU. Ultimately, though, it is up to Google to decide how to restructure its relationships with device-makers and submit that to European regulators for approval. That raises questions about how many of Google’s more than 2 billion Android users will be affected by the changes.
Google long has given device makers such as Huawei, LG and Samsung an ultimatum: They must set Google’s search engine as the default on Android smartphones and tablets and pre-install Google’s Chrome Web browser, or they risk losing access to Google’s app store, called Google Play. Without that portal,
owners of Android devices can’t easily download games and other tools from third-party developers.
From Google’s perspective, bundling those apps offers the tech giant a way to derive data from smartphone users while serving them lucrative ads. The company also has maintained that it never stopped Android users from downloading rival services if they preferred.
But Vestager maintained in a statement that Google’s activity instead has turned Android into 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. This is illegal under EU antitrust rules.”
In response, Google chief executive Sundar Pichai said Wednesday that the company would appeal the EU’s decision.
“We’ve always agreed that with size comes responsibility. A healthy, thriving Android ecosystem is in everyone’s interest, and we’ve shown we’re willing to make changes,” he said in a blog post. “But we are concerned that today’s decision will upset the careful balance that we have struck with Android, and that it sends a troubling signal in favor of proprietary systems over open platforms.”
The changes could pave the way for rival app makers in search and Web browsing to gain new footing, if Google apps no longer come pre-installed on Android devices. That could lessen the revenue that Google
derives from mobile ads. It could even prompt Google to begin charging a manufacturer such as LG or Samsung to license its operating system, which it currently provides free.
The steep penalties mark the second time in as many years that the EU has determined Google wields its power in a way that harms competition and consumers. In 2017, Vestager slapped the U.S.-based tech giant with a $2.7 billion fine for giving its shopping-comparison service prime real estate in search results over its rivals’ competing offerings. Vestager previously has announced she is also probing other elements of Google’s sprawling corporate empire, including its advertising business.
The protracted scrutiny stands in stark contrast to the United States, where regulators probed Google but opted in 2013 to leave the company intact.
“We’re hoping that U.S. regulators will be encouraged,” said Barry Lynn, executive director of the Open Markets Institute, which has advocated for more scrutiny of Silicon Valley’s biggest tech companies. “American antitrust law enforcers should study this very closely and learn from it, and emulate it, and build on it.”
Unlike Apple, which is the sole manufacturer of iPhones and iPads that run its software, called iOS, Google sells its own devices, such as the Pixel, while licensing Android to other hardware companies at no cost. In some cases, Google also provides significant financial incentives for those device-makers to adopt Android and pre-install the search giant’s full suite of apps — a practice that the EU said Wednesday has “harmed competition by Android devices can’t easily download games and other
tools from third-party developers.
In response, Google charged that the EU has ignored the reality that Android device owners download and use apps made by a wide variety of other developers — while manufacturers are not prohibited from installing their own competing services.
Pichai stressed in his public rebuttal that some of Google’s apps, including Chrome, Mail and Maps, are popular services that help Android devices work “right out of the box.” Some also generate revenue and help cover the “costs involved in building Android,” he said.
Vestager first outlined competition complaints with Android about two years ago. In its formal decision Wednesday, the EU also faulted Google’s policy of prohibiting Android device-makers from producing other smartphones or tablets that run on modified versions of the operating system, known as “forks.” That includes Amazon’s Fire OS, a mobile operating system that is based on Android. The EU said it “found evidence that Google’s conduct prevented a number of large manufacturers from developing and selling” those devices. (Amazon founder Jeff Bezos owns The Washington Post.)
To Google, however, its policies ensure uniformity in how Android looks, feels and operates, with the aim of making it easier for developers, who have to create only one version of their app for a wide array of devices. As a result, organizations such as the Developers Alliance, an app-focused advocacy group that counts Google as a board member, said the EU’s decision would pose severe technical headaches for smaller companies and coders.