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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  • JoeyJoJo123 - Wednesday, July 18, 2018 - link

    "Google’s counterargument to this was that the restrictions were necessary in order to avoid fragmentation"

    They do that to themselves by putting the onus of publishing their OS level updates to the phone manufacturers rather than taking on the task of standardizing the upgrade/update process themselves. Yeah, it's a monumentally more difficult task due to how each developer wants to custom skin over the base Android UI, but again, they allow this, so again, they let the fragmentation happen.

    Would be fine if all phones were sold under the stock Android UI (no, not even the Google Pixel base install, as even that has a custom UI) with manufacturers having their choice to preload whatever apps they want, with UI layers being a custom app. In this manner everyone could be eligible for direct Android updates from Google and if a UI layer app broke (say, the Samsung UI), then the onus for updating that one app would be on the manufacturer for fixing their custom piece.
    Reply
  • quorm - Wednesday, July 18, 2018 - link

    Instead of maintaining the underlying OS, Google has taken the opposite approach and broken out their own apps, so they can be updated while the OS remains buggy and vulnerable.

    Google's primary goal is to keep their phones an effective conduit for their ads, and it shows. So many of their products, not just Android, remain in a buggy state, but they don't care, since it's not really their core business.
    Reply
  • sharath.naik - Wednesday, July 18, 2018 - link

    EU has become a money grabbing machine. More like a patent troll.
    1. Google requiring to install search and browser . for app store app seems logical as the search is integrates across and you need the browser components in most applications. Nothing stopping others from installing alternative browsers!!
    2. paid people to promote their app. May be they for got what ads are? some one paying to promote their product.
    3. This may be the only issue. google can prevent installing their apps on android forks but cannot force people from selling android forks without google apps. But the statement itself does not make this distinction clear. if google was asking not to install the apps on the forks or not to sell the forks altogether. I am suspecting the prior as the later will be not be appropriate.
    Reply
  • sharath.naik - Wednesday, July 18, 2018 - link

    OK they did make point 3 clear. EU is akin to a ambulance chasing bunch of lawyers. Reply
  • zepi - Wednesday, July 18, 2018 - link

    Google could arguably choose not to sell it's products in EU if it thinks that the anti-trust rules are unfair. Reply
  • milkod2001 - Thursday, July 19, 2018 - link

    And loose core business market at several $billions a year. You mad? Reply
  • zepi - Thursday, July 19, 2018 - link

    Better follow the local laws then. Microsoft was fined handsomely for bundling browser, forcing software on computer oem’s and I can’t remember what else.

    Legal precedent seems to have been set back then.
    Reply
  • peevee - Friday, July 20, 2018 - link

    "Google could arguably choose not to sell it's products in EU if it thinks that the anti-trust rules are unfair."

    Google does not sell Android.
    Reply
  • sseemaku - Wednesday, July 18, 2018 - link

    Can you explain how can companies sell 'open source' android phone when google doesn't allow app store if their search and browser app are not pre-installed? The fine is very less in my opinion. Reply
  • sseemaku - Wednesday, July 18, 2018 - link

    "Nothing stopping others from installing alternative browsers" why can't i uninstall the damn chrome browser after i installed another browser? From where I come from, that is called forcing people to use a specific app and killing alternatives. Reply

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