Google is appealing a record €4.34bn fine from the European Commission after it was accused of using its Android mobile operating system to bolster its dominance as a search engine.
A three-year investigation found the US tech giant had broken competition laws by requiring smartphone manufacturers to pre-install Google Chrome and Google’s search app if they wanted to license its app store.
It was also found to have made payments to major manufacturers on the condition they did not pre-install rival search apps, and to have prevented manufacturers that wanted to pre-install its apps from ever selling phones equipped with non-approved versions of Android.
“Google has used Android as a vehicle to cement its dominance as a search engine,” Margrethe Vestager told a press conference in Brussels on Wednesday. “These practices have denied rivals a chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the very important mobile sphere. This is illegal under EU anti-trust rules.”
The company now has 90 days to correct the issues raised by the EU or face daily fines of 5 per cent of its annual global turnover. A Google spokesperson said in a statement: “Android has created more choice for everyone, not less. A vibrant ecosystem, rapid innovation, and lower prices are classic hallmarks of robust competition. We will appeal the Commission’s decision.”
The Commission said it had investigated to what extent competition for smartphone users with Apple could “constrain Google’s market power for the licensing of Android to device manufacturers”, and had found that it had not. The Commission said consumers selected phones based on several factors, not just the operating system, and that Apple’s pricing structure put its phones out of reach of some buyers.
Vestager, one of the most prominent figures in European politics, said the investigation had revealed just one per cent of consumers had downloaded a rival search app and only 10 per cent had downloaded a different web browser.
The fine is the biggest ever issued by the Commission against a single company. Last year, Google was handed a €2.24bn for manipulating search results to prioritise its own shopping service. An investigation into Google’s advertising service AdSense is ongoing.
The EU could have fined Google up to 10 per cent of its annual revenue, which would have amounted to more than double the fine it imposed. Google’s cash reserves added up to almost $103bn at the end of the last financial year. The fine will sit in a standalone fund until the appeal process is complete.
The GSMA, the trade body for the mobile industry, welcomed the news. Its chief regulatory officer, John Guisti, said: “This will enable consumers to benefit from a greater choice of mobile services, and allow more players to innovate and offer new services in the market.”