EU regulators fine Google record $5 billion in Android case

A 3D printed Android mascot Bugdroid is seen in front of a Google logo in this illustration, July 9, 2017. (Reuters)

EU antitrust regulators levied a record 4.34-billion-euro ($5.04 billion) fine against Google on Wednesday for illegal restrictions on Android smartphone makers and mobile network operators.

The European Commission (EC) ordered Google to end the illegal conduct within 90 days or face additional penalties of up to 5 percent of parent Alphabet’s average daily worldwide turnover.

The EU enforcer also dismissed Google’s arguments citing Apple as a competitor to Android devices, saying the iPhone maker does not sufficiently constrain Google because of its higher prices and switching costs for users.

Three-year investigation

The EU antitrust enforcer charged Google with using its dominant Android operating system to marginalise rivals following a three-year investigation – seen as the most important of three EU cases against the world’s most popular internet search engine.

“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,” a source told AFP.

The European Commission, the 28-nation EU’s executive arm, refused to comment.

The long-awaited decision comes as fears of a transatlantic trade war mount due to President Donald Trump’s shock decision to impose tariffs on European steel and aluminium exports.

European Commissioner for Competition Margrethe Vestager has targeted a series of Silicon Valley giants in her four years as the 28-nation European Union’s antitrust chief, winning praise in Europe but angering Washington.

The case against Android is the most significant of three complaints by the EU against the search titan, which has already been hit with a record-breaking 2.4-billion-euro fine in a Google shopping case.

Brussels has repeatedly targeted Google over the past decade amid concerns about the Silicon Valley giant’s dominance of internet search across Europe, where it commands about 90 percent of the market.

 ‘Financial incentives’ 

In the Android file, the European Commission has accused Google of requiring mobile manufacturers such as Samsung and Huawei to pre-install its search engine and Google Chrome browser on phones, and to set Google Search as the default, as a condition of licensing some Google apps.

Google Search and Chrome are as a result pre-installed on the “significant majority” of devices sold in the EU, the commission says.

The complaint formally lodged in April also accuses Google of preventing manufacturers from selling smartphones that run on rival operating systems based on the Android open source code.

Google also gave “financial incentives” to manufacturers and mobile network operators if they pre-installed Google Search on their devices, the commission said.

 Other tech giants also targeted

Vestager’s previous scalps include Amazon and Apple.

The EU’s biggest ever punishment targeted Apple in 2016 when it ordered the iconic maker of iPhones and iPads to pay Ireland 13 billion euros ($16 billion) in back taxes that it had avoided by a tax deal with Dublin.

The EU has also taken on Facebook over privacy issues after it admitted that millions of users may have had their data hijacked by British consultancy firm Cambridge Analytica, which was working for Trump’s 2016 election campaign.

The Google decision comes just one week before European Commission chief Jean-Claude Juncker is due to travel to the United States for crucial talks with Trump on the tariffs dispute and other issues.

Transatlantic tensions are also high after Trump berated NATO allies over defence spending at a summit last week, over his summit with Russian leader Vladimir Putin, and over the US president’s pull-out from the Iran nuclear agreement and Paris climate deal.