19 July, 2018
The European regulators have slapped Google with a record-breaking fine of $5 billion for breaking antitrust laws revolving around its Android operating system. Crucially, by default all Android phones use Google as the default search engine and Google Chrome as the default web browser.
Speaking in Brussels, Vestager said preinstallation was an advantage that could create a "status quo" bias, in which people are far more likely to use search apps and browsers already present on their devices and are unlikely to download competing apps.
The commission accused Google of plotting for years to maintain its stranglehold on the internet-search market.
The revelation follows an European Union investigation into Google's Android licensing requirements and its contracts with carriers.
This fine is the EU's largest punishment ever imposed on a tech firm.
The new fine will, if confirmed, surpass the 2.4-billion-euro penalty that the European Union imposed on Google over its shopping comparison service in 2017.
But the impact of the EU's decision to fine Google over Android dominance could be more than just monetary.
At the time, the European Commission said it wanted to ensure that manufacturers are free to pre-install apps of their choosing and allow for competition in services such as internet search.
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The EU's ruling gives Google 90 days to change its practice or face even more severe penalties of up to 5% of its average daily revenue. "A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition".
Google has built a massive business of banner and videos ads, thanks largely to its central role on Android devices. The organization welcomed the EU's fine today in a press release.
'They have denied European consumers the benefits of effective competition in the important mobile sphere'.
Google required phone manufacturers to preinstall Google Search and its browser app, Chrome, to access Google's app store, Google Play. "This harmed competition by significantly reducing their incentives to pre-install competing search apps", the EC said, but noted this practice ended in 2014.
"The fine is based on the length of the infraction, but also on whether antitrust authorities believe there was an intention to commit the offence, and whether they excluded competitors or not", said a source.
The fine accounts for around 40% of Google's 2017 net profit of $12.62 billion. "The decision also requires Google to refrain from any measure that has the same or an equivalent object or effect as these practices". In this case, Vestager faulted Google for using Android as a means to solidify its strong foothold in search and advertising, while making it harder for rivals to offer competing apps and services. Google would also need to stop preventing forked Android versions from coming to the market without its approval.
According to Google CEO Sundar Pichai, Android has vastly increased choice in the smartphone market.