A 90-day window opened for Google on Wednesday: that’s how much time it has to stop conducting “illegal practices regarding Android mobile devices to strengthen dominance of Google’s search engine”, according to the European Commission.
That announcement came along with a record-breaking fine of €4.34b (USD $5.05b).
According to the New York Times, this steep penalty is “among the most aggressive regulatory moves ever made against American technology companies.”
It almost doubles the €2.42b – about USD $2.8b – that the European Union levied against the company last year over promoting its own shopping comparison service at the top of its search results.
Having said that, the fine represents just over two weeks of revenue for Google parent company Alphabet, according to Reuters – a sum that “would scarcely dent” the company’s current cash reserves of $102.9b.
EU Commissioner Margrethe Vestager, in charge of competition policy, said in a press release on Wednesday that the case is about the following three restrictions that Google has foisted on Android device manufacturers and network operators – practices that ensure that Android device searches wind up going to Google’s search engine, the European Commission claims. Google has:
- Required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google’s app store (the Play Store).
- Made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices.
- Prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google (so-called “Android forks”).
These antitrust measures employed by Android have helped keep Google on the throne as the supreme search leader, Vestager said:
In this way, Google has used 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. This is illegal under EU antitrust rules.
Besides accusing Google of unfairly using Android policies to keep its own search engine on top, Brussels is also accusing the company of offering a cut of search profits to manufacturers and telecoms providers who exclusively install Google’s search engine on their devices.
In a post proclaiming that Android has created more choice, not less, Google CEO Sundar Pichai pointed out that Hey, 11 years ago, Google chose to give away Android. For free. In spite of the ongoing billions it’s cost to build the operating system into what it is today.
We can offer phone makers the option of pre-loading a suite of popular Google apps (such as Search, Chrome, Play, Maps and Gmail), some of which generate revenue for us, and all of which help ensure the phone ‘just works’, right out of the box. Phone makers don’t have to include our services; and they’re also free to pre-install competing apps alongside ours. This means that we earn revenue only if our apps are installed, and if people choose to use our apps instead of the rival apps.
A Google spokesperson told Digital Trends that what’s resulted has been “a vibrant ecosystem, rapid innovation, and lower prices” that don’t add up to an antitrust scenario – rather, they’re “classic hallmarks of robust competition.”
In a move that will shock no one, Google plans to appeal the EC’s decision, Pichai said in a Tweet:
Rapid innovation, wide choice, and falling prices are classic hallmarks of robust competition. Android has enabled this and created more choice for everyone, not less. This is why we intend to appeal today's Android decision https://t.co/TnpMZlDV8j
— Sundar Pichai (@sundarpichai) July 18, 2018
Pichai warned that Wednesday’s decision could lead to either an end to free Android or a more tightly controlled distribution model, such as that of rival phone maker Apple:
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.
After all, if Google can’t rely on the revenue stream from Android, that could mean that device manufacturers might, down the line, be faced with paying for Android service – costs that could make for more expensive phones for users.
TonyG
Could this mean the end of free Android? Well if it means that it is more secure, our privacy is not violated, and it adds £/$/€10-50 to the cost of a smartphone, does it really matter? I would be happy to be offered the choice when powering up an Android phone for the first time to be given the choice between paying for an unbiassed, secure and private OS, or choosing to have biased services and not paying for the OS. Presumably 90% or more would choose not to pay and hand over their data and be fed Google biased result. That would be their choice, but at present it is not easy for the average user to ensure that they have the privacy and unbiassed results without a lot of work. There are a stack of Google apps and services on an Android phone that cannot be removed – disabling them only reverts them to their initial release, with warnings about dependencies. In the end I had to spend days on a factory reset and reinstalling and setting up services and apps (if you are using corporate stuff, it is not just simply a restore from backup).
mike@gmail.com
I just see another money grab. They decide they need some cash so they just hit up another American company. Never made sense when they did it to Microsoft, and this makes even less sense. What alternative does android have? Users are going to buy a new phone, sideload an .apk onto the device, and have no way of verifying it’s authenticity or security in that process? Just for web browsing, or to have an app store? Why isn’t Apple being sued? Why isn’t GM being sued for only offering “OnStar” behind the OnStar button? Where does this stop?
Herbert Schmell
If one has ever tried to get rid of some of the preinstalled google apps, the answer should be very clear to the recent developments.
brianc6234
Google should just get out of Europe. The EU is a huge mess now. Not worth doing business there. They need money I guess so they keep hitting American companies with gigantic fines. No thanks on that.
Epic_Null
I suppose if Google is getting out of Europe, then there would have to be a new, privacy conscious, mobile competitor showing up, huh? Any chance I could get in on it?
Bentham
Europe and America (USA) are culturally very different and in this respect pretending that we can have a truly global market is a fiction. (This is the UKs fundamental problem over Brexit which is splitting it apart)
Do we want an American culture of self-reliance, and minimally restricted free capitalism even if it means a dog-eat-dog society where the weakest can go to the wall
Or do we want a European culture which believes that government has a role in enabling a more equitable society where market dominance is not allowed to lead to unrestricted profits
Keith
Isn’t the core of Android based on open source code? If so, is there any way Google could charge for it if they wanted to, without breaking the open source agreements?