Monday, 19 November, 2018

EU Fines Google $5 Billion for Stifling Android's Competition

EU google antitrust Google faces $5 billion fine over Android - report
Cristina Norman | 19 July, 2018, 10:22

The European Commission announced a fine against Google today of €4.34 billion ($5.04 billion) for breaking antitrust policies with Android.

While Google has deep coffers of about $103bn and can easily afford the fine, the company said the punishment was unjustified.

Regulators create antitrust laws to prevent companies from abusing their position of power to restrict competition.

Google has used Android as a vehicle to cement its dominance as a search engine.

Commissioner Margrethe Vestager, who oversees the competition policy, said Google's practices have denied rivals the chance to innovate and compete and denied European consumers the benefit of effective competition in the mobile space which is illegal under EU antitrust rules. In a blog post, Google's CEO, Sundar Pichai, wrote that the commission ignored "the fact that Android phones compete with iOS phones", adding that the decision did not consider the choice Android offers to phone makers, mobile network operators, app developers and consumers.

The Commission believes that by placing the above restrictions, Google broke the antitrust laws of European Union thereby gaining an unfair advantage over its competitors.

More significant than a blockbuster fine could be an accompanying order freeing up phone manufacturers to choose non-Google apps to install on Android phones. Also true. What he doesn't address is how not agreeing (and thereby missing out on the Google payout and losing the right to install the Play Store) might affect that manufacturer's business.

Anna Morfey, a partner at Hausfield, pointed out that today's fine is not too dissimilar to the one imposed on rival firm Microsoft over a decade ago in relation to its Windows operating system and the pre-loaded installation of products like Windows Media Player and Internet Explorer. That would be equivalent to roughly $300 million per day based on 2017's totals, so if the appeal fails, Google will need to pay up or face the possibility of serious damage to its bottom line. "Our concern is that by requiring phone makers and operators to pre-load a set of Google apps, rather than letting them decide for themselves which apps to load, Google might have cut off one of the main ways that new apps can reach customers".

He also defends the company's app bundling, arguing it's easy for users to install alternatives if they don't want to use Google's pre-installed options.

The fine is almost double the amount Google was asked to pay up by the watchdog a year ago, after a separate investigation found it had abused its online shopping service to prioritise its own results.

"The European Commission's decision to fine Google €4.3bn will make smartphones more expensive and make the market less competitive". Google will account for a third of all global mobile ads in 2018, according to research firm eMarketer, giving the company around US$40 billion in sales outside the US Google risks losing that traction if it is forced to surrender its real estate on millions of Android phones.

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