EC’s 4.3 bn Euro fine on Google could impact its Android business

The European Commission (EC) has slapped a €4.3 billion ($5 billion) fine on Google for violating EC’s antitrust rules regarding Android mobile devices. 

According to research firm eMarketer, Google has built an immense business of banner and videos ads, mainly through its role on Android devices and will account for a third of all global mobile ads in 2018, giving the company around $40 billion in sales outside the US. Google risks losing that advantage if it is forced to surrender its real estate on millions of Android phones. 

In a release issued, EU pointed out that Google required manufacturers to pre-install the Google Search app and browser app (Chrome) as a condition for licensing Google’s Play Store. According to EU, this 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’). 

The Commission’s decision concerns three specific types of contractual restrictions that Google has imposed on device manufacturers and mobile network operators. These have enabled Google to use Android as a vehicle to cement the dominance of its search engine. EU’s decision does not question the open source model or the Android operating system as such. 

EU stated that Google had engaged in three separate types of practices that breached it antitrust rules:

• Illegal tying of Google’s search and browser apps
• Illegal payments conditional on exclusive pre-installation of Google Search
• Illegal obstruction of development and distribution of competing Android operating systems

Google has been given 90 days to stop what the EU said were ‘illegal practices’ on contracts with handset manufacturers that push Google services in front of users. 

Meanwhile, Google is preparing to appeal against the fine imposed by EU and maintained that Android had created more choices for users. 

In case Google fails to ensure compliance with the Commission decision, it would be liable for non-compliance payments of up to 5 per cent of the average daily worldwide turnover of Alphabet, Google’s parent company. 

This latest fine by the EU follows last year’s penalty of €2.4 billion over shopping-search services. It could soon be followed by more fines from a probe into online advertising contracts.