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EU regulators fine Google record $5 billion in Android case

19 July 2018

European regulators came down hard on another U.S. tech giant overnight fining Google a record US$5 billion (NZ$7.3 billion) for forcing cellphone makers that use the company's Android operating system to install Google search and browser apps. After all, Google a year ago made $5 billion every 16 days so it can do it again.

European Competition Commissioner Margrethe Vestager said Google used Android as a vehicle to cement the dominance of its search engine.

"This is why competition is very far away if you first have done something illegal to make sure that the out of the box experience is the Google experience", Vestager said. "We will appeal the commission's decision".

The EU's fine is the biggest ever imposed on a company for anticompetitive behavior.

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Last year, the EC issued a €2.42 billion (~$2.82 billion) fine to Google for "abus [ing] its market dominance as a search engine by giving an illegal advantage to. its comparison shopping service". Google issued a statement that it will be appeal the ruling, but it is unlikely that will lead to a change in decision.

Android has an 80% market share among mobile operating systems and a 95% market share in "licenseable mobile operating systems", a market which doesn't include vertically integrated operating systems such as iOS or Blackberry OS because those can't be licensed by manufacturers. It also accused Google of paying device manufacturers to pre-install Google Search. Manufacturers looking to provide buyers with access to the Google Play Store also had to give other Google apps prime placement on the phone, including Google Search.

Google chief executive Sundar Pichai said the Commission had overlooked the level of choice Android offered people. "A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition".

Google also prevented manufacturers from selling smartphones that run on rival operating systems based on the Android open source code, the commission said.

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A third case also stands against the company from 2016, in which the European Union has accused the firm of preventing third parties using its Adsense product from displaying search advertisements from Google's competitors.

Vestager said Google also made payments to phone makers to ensure they exclusively pre-installed its search app on their devices. Pichai also mentioned that there are over 24,000 Android smartphone SKUs from 1,300 phone maker brands now.

Google started this practice in 2011, but began to slowly row back on it in 2013 after it became aware of the Commission's scrutiny. It has 90 days to comply or parent company Alphabet could be hit with additional fines of up to 5% of its average daily turnover. Android phone users can easily install other applications, even if they're not pre-installed by manufacturers, he noted. The EU says that's still illegal, though.

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EU regulators fine Google record $5 billion in Android case