Google fined $5 billion by the EU for antitrust violations
In the ongoing feud between Google and the EU, the EU has fined Google $5 billion for antitrust violations. This marks the second time the company has come under fire from the EU in recent months. We knew it was coming because of an earlier report, but the fine has now been confirmed. The EU has said that they “imposed illegal restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet search.” If Google fails to end its conduct within 90 days, then they will be subject to fines of 5% of their revenue per day. This conduct involves illegally tying Chrome and other search applications to the Android system.
The penalty is certainly harsh, but it’s a grey area. Their dominance may prove difficult for competitors to deal with, but their actions prevent fragmentation of the platform. They argue that device OEMs are welcome to sell devices without Google services installed. They also argue that OEMs are free to pre-install competing applications alongside Google’s. Android is all about choice and there’s nothing stopping you from using alternative applications or buying an Android phone without pre-installed Google services.
The European Commission disagrees and says that the company’s primary source of revenue is its search engine. While that may be the case, the company’s point is that nobody is forcing OEMs to pre-install their applications. That’s also true, but the Play Store is the main source of applications on Android devices. Users won’t buy a device that they can’t install applications on. The problem lies in the requirement that companies must pre-install a bundle of Google applications in order to get the Play Store.
Google intends to appeal the ruling. The company feels that the decision rejects the choice Android has given to users. This ruling could potentially favor proprietary systems over open markets – or that’s how the company feels, anyway. The company can now no longer prevent device OEMs from creating custom forks of Android either. They were found preventing other companies from using Amazon’s Fire OS for fear of fragmentation. The European Commission says that the company “did not provide any credible evidence that Android forks would be affected by technical failures or fail to support apps.”
Sundar Pichai, CEO of Google, wrote a blog post today to address the situation. He talks about the “careful balance” of the Android business model, which allows them to offer the OS for free in return for including their app bundle. Replacing Chrome and Google Search on a large chunk of devices would have a big impact on their ad revenue. Pichai warns that if this business model is changed, the company may need to license Android to OEMs to make up for it.
European Commission Press Release Google’s Response