Today the European Commission has announced that it has found Google in breach of EU antitrust laws and has fined the company €4.34 billion.

The original proceedings against Google formally opened in April 2015, and investigated Google’s business practices related to Android licensing between 2011 and 2014. In their investigation the EU determined that Google was in violation of EU rules prohibiting anti-competitive agreements and abuse of dominant market positions.

As detailed in the thorough press-release, Google was found to have engaged in a trio of illegal practices:

  • 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; and
     
  • has 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").

Furthermore in the press release, the Commission correctly details Google’s business model for Android, as it describes that the operating system was created in order for Google to be a part of the crucial shift from desktop PCs towards mobile devices. And, in turn, to ensure that its flagship product, Google Search, would feature predominantly in the mobile space. The Commission determined that starting in 2011 Google became dominant in the market for app stores for Android, and thus its practice of forcing manufacturers to preinstall the Google Search app was found to be illegal.

The tying of the Google Chrome browser into the list of required pre-installed application from 2012 onwards was also found to be abusive of its dominant market position.

The commission argues that pre-installation creates a status quo bias for users, as whatever default applications are included with a device are the predominantly retained ones by users, creating a significant barrier to entry for competing alternatives. Google forcing manufacturers to pre-install these applications thus reduced the ability of rival application developers to compete.

The investigation also found that Google offered significant financial incentives to device manufacturers to exclusively pre-install only Google Search across that manufacturer's whole device portfolio. The investigation is said to have shown that rival search engine providers would have been unable to counter-compensate a manufacturer for the loss of revenue from Google while still generating a profit of their own. The Commission found that this particular conduct was gradually lessened in 2013 and ceased as of 2014.

Finally, one of the bigger findings is Google’s obstruction of the development and distribution of competing Android operating systems (forks). As Android is an open-source operating system, in theory any manufacturer could just fork it and continue to develop it independently as they would see fit. While in theory nothing stops a manufacturer from doing this, in practice Google’s strict CTS requirements mean that any such fork would not be supported by any Google services, and as such be shut out of the main Android application ecosystem. Of particular note is that a manufacturer would lose all rights to bundle Google apps across all of its devices if it were to sell any alternative device with a forked OS.

Google’s counterargument to this was that the restrictions were necessary in order to avoid fragmentation; the Commission however found that Google had made no effort in trying to determine if Android forks would be compliant with the technical requirements of its own proprietary applications. The Commission also said that Google had made no credible evidence available that could demonstrate any technical failures in forks that would cause them to be unable to support Google’s apps.

The €4.34bn fine takes into account the duration and gravity of the infringements, and is based on Google’s revenue from search and advertising in the European Economic Area. The Commission decision requires Google to end its illegal conduct within 90 days or else face further fines of up to 5% of daily average worldwide turnover of Alphabet (Google’s parent company).

Google for their part is refuting the commision's anti-competitive findings, and has stated that they intend to formally appeal the EU's ruling.

Source: European Commission Press Release

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  • johnthacker - Wednesday, July 18, 2018 - link

    Apple has a smaller market share, but they have such an enormous margin per phone (and money made off ancillary things like the App Store) that they have more profit in the phone industry than all of Android combined, so I'm not sure that market share is the proper metric to look at. But then again, my viewpoint is more from a US standpoint, where antitrust is always from the viewpoint of the consumer; European approaches to antitrust have always been about what's good for other companies, regardless of the consumer. Reply
  • Zizy - Thursday, July 19, 2018 - link

    Even from consumer point of view - customers still have choice to pick Android, no matter if Apple picks 10% or 90% of the profits.
    On the other hand, as Android had 80%+ market share in EU (close to 90% if you exclude UK), consumers are not realistically presented with choice.

    But you are right, this isn't about consumer directly, but about competition.
    Reply
  • milkod2001 - Thursday, July 19, 2018 - link

    EU might go after Apple for not paying taxes. It own €14 billions in taxes not paid in EU already. Apple made some crazy deal with leprechauns in Ireland for not paying anything. Reply
  • peevee - Friday, July 20, 2018 - link

    Tax laws are per country. Ireland's law allowed it. EU cannot overridde Irish tax laws. Reply
  • Achaios - Wednesday, July 18, 2018 - link

    Ιf they pay in cash, do they get 10% discount? Reply
  • SirPerro - Wednesday, July 18, 2018 - link

    My useless opinion is...

    Yes, they abused their dominance, but... Thank God they did it.

    Android fragmentation is bad enough right now. I cannot imagine the fucking MESS if every OEM had shipped their own fork, or Amazon's fork.

    Basically it would have destroyed the ecosystem and made developers avoid it like the plague.
    Reply
  • rrinker - Wednesday, July 18, 2018 - link

    Damned if you do, damned if you don't - this is EXACTLY akin to Linux. And many other Open Source projects. Yes, anyone can freely take it and expand it long their own vision. But then there are dozens of versions of "mostly the same thing". More choice, but more confusion, especially after the different variants fork enough to have compatibility issues. here are certainly benefits to a tightly controlled ecosystem where everything from the hardware to the software is tightly integrated - this has always been the issue with Windows, it has to run on any old crap hardware, with drivers written by everyone from experts to complete idiots. ANd when it crashes, everyone blames Windows. Certification of drivers has helped, but of course everyone screams that Microsoft is trying to block innovation by requiring drivers to be certified. Doesn't help that the vetting seems to be about as much as Google does for the Store apps where all sorts of malware gets passed the 'screeners', but if Microsoft clamped down there'd be a huge outcry. Pick one - tightly controlled and stable, or wide open and take your chances. You can't have both. Reply
  • cbm80 - Wednesday, July 18, 2018 - link

    Not that I'm complaining, but Android isn't really dominent. It's co-dominent with Apple. The unit market share favors Android, but that's not the most relavent measure. App store revenue is, because that's what attracts developers. Reply
  • peevee - Friday, July 20, 2018 - link

    Most apps are ad-supported, just like Google's own. And for ads, #of devices matter. Reply
  • dgingeri - Wednesday, July 18, 2018 - link

    Personally, I think Google just ought to say "you can use Android as long as it is not on phones for the EU market", and screw them. They can live with the far less competition friendly iPhones. EU is just capitalism unfriendly due to politics and their general hatred for the US. Reply

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