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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  • milkod2001 - Thursday, July 19, 2018 - link

    EU is not capitalism unfriendly.It is US monopolise unfriendly because it wants EU companies to make money instead which is understandable. There is no hatred to US, it is all about money as always:) Reply
  • zepi - Thursday, July 19, 2018 - link

    Certain guy in Washington is constantly attackin Eu, calling them enemies and enacting trade barriers. Maybe if there was someone else less hostile towards others, there were less reasons to find flaws in the doings of US companies. Reply
  • peevee - Friday, July 20, 2018 - link

    EU did it many times before Trump. And US never retaliated. Enough! Reply
  • Tams80 - Wednesday, July 25, 2018 - link

    That's because the EU and other European countries tend to have much stricter regulations that the US.

    FFS, the US allows chlorinated chicken to be sold and you have to wash your eggs because you chemically wash them.
    Reply
  • unrulycow - Thursday, July 19, 2018 - link

    The main problem with this is that the easiest remedy for Google is to become less open. If they stop releasing source vode then they won't have to worry about forks. If they stop allowing you to change the default applications like Apple, which the EU has said is fine, then there is no problem locking you into it's ecosystem. No good can come of this Reply
  • peevee - Friday, July 20, 2018 - link

    Fines of American companies is the only way EU participates in high-tech development these days... sad. Reply
  • Hyper72 - Saturday, July 21, 2018 - link

    This is silly. The European Commission strongly regulate European companies as well. This is not about EU vs. USA. They clearly also strike down on anti-competitive behavior within the EU from EU companies, both in the past and the present. Whether we agree with them or not; they have investigated and believe Google is dominant and have been strong-arming the market (device manufacturers). Reply
  • BurntMyBacon - Monday, July 23, 2018 - link

    While EU does, in fact, crack down on EU companies that damage other EU companies through illegal practices, there are a few perceptions that fuel this EU vs USA image. This unfortunately leads to some extreme views and misinformation. One of these perceptions is that EU only deals large fines to American companies. This perception likely stems from the fact that American news agencies often ignore EU actions when they don't involve American companies. Another perception is that never fines an EU company that damages a American company in the EU market through illegal practices. I, unfortunately, do not have a counterexample for this perception, so someone else will need to fill in the blank. A third perception is that EU holds EU companies to a different standard than American companies. The high profile Intel case some years back did nothing to dissuade this perception as both Intel and the EU companies they were dealing with allegedly benefited at the expense of AMD, but the EU companies in question were not fined. Certainly, it would have been a different story if Intel threatened the companies in some way to exclude AMD from their line up, but as I understand it, they simply offered cash, marketing support, and discounts for exclusive use of their product. While this was clearly found in violation of the EU antitrust regulations, the EU companies that participated were not damaged. Rather, as they benefited from this arrangement as well, they could more accurately be described as collaborators. Only AMD and possibly the EU companies that didn't buy in could be considered victims.

    The EU is not an entity akin to a patent troll and doesn't attack only American companies. They have a relatively well set of rules that they choose to enforce strictly often to the benefit of not just EU denizens. However, some of their actions have thrown into question the consistency with which they enforce their rules and the possibility of biases in their judgements.

    As to the Google judgement, while I don't necessarily agree with the entire set of allegations nor the weight of the penalty, it does appear that Google was legitimately in violation of EU law for at least some of the allegations. I have a hard time being outraged at the verdict, though I do disagree with it in part.
    Reply

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