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EU Hits Google With A Record $5 Billion Penalty For Antitrust Violation

(Photo by Lionel BONAVENTURE/AFP/Getty Images)

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Eric Lieberman Deputy Editor

The European Commission fined Google a record 4.34 billion euros (roughly $5 billion) Wednesday for allegedly abusing the dominance of Android, its mobile operating system.

The penalty, brought down by the European Union’s competition watchdog, is the largest against any individual company. It follows a previous record fine in June 2017 in which the EU’s antitrust regulator accused Google of favoring its price-comparison search results over those of its rivals, and subsequently hit Google with a $2.71 billion penalty.

If Google fails to pay the fine within 90 days, the EU’s governing body will exact an additional 5 percent of Google parent company Alphabet’s “daily worldwide turnover” for each day thereafter.

Margrethe Vestager, the EU’s competition commissioner, says Google engaged in three different illegal practices.

First, she accuses the U.S.-based tech giant of forcing phone manufacturers to pre-install the Google Chrome browser and its proprietary search app if it also wants to include the Play Store (which offers all other apps).

Second, Google paid certain large phone makers and mobile network operators to pre-install the search app exclusively, according to the EU.

Third, Google allegedly “prevented” manufacturers of Android-powered mobile devices from selling phones that run on non-approved “alternative versions” of the operating system — also known as “Android forks.”

“Today, mobile internet makes up more than half of global internet traffic. It has changed the lives of millions of Europeans,” Vestager said in an official statement. “In this way, Google has used Android as a vehicle to cement the dominance of its search engine. These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules.”

Google vehemently denies the charge that it is anti-competitive.

“Android has created more choice for everyone, not less,” a Google spokeswoman told The Daily Caller News Foundation. “A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition.”

The company says it is appealing the Commission’s decision.

Given the serious accusations and the considerable monetary penalty (even for a powerhouse like Google), CEO Sundar Pichai directly responded himself, arguing that while its mobile platform is very popular, it actually expands the choice of phones available around the world.

“The decision ignores the fact that Android phones compete with iOS (Apple’s operating system) phones, something that 89 percent of respondents to the Commission’s own market survey confirmed,” he wrote. “We’ve always agreed that with size comes responsibility. A healthy, thriving Android ecosystem is in everyone’s interest, and we’ve shown we’re willing to make changes. But we are concerned that today’s decision will upset the careful balance that we have struck with Android, and that it sends a troubling signal in favor of proprietary systems over open platforms.” (RELATED: Europe Vs. Silicon Valley: How The Continent Is Responding To Big Tech’s Growing Power)

The Information Technology & Innovation Foundation (ITIF), a pro-innovation nonprofit that receives sponsorship in some form from Google, agrees.

“Google is the only company that has built a mobile ecosystem that rivals Apple’s, and rather than support this competition the Commission has weakened it,” ITIF Vice President Daniel Castro said in a statement. “The Commission’s ruling is a blow to innovative, open-source business models, and other companies will likely think twice before trying to develop anything other than a proprietary, closed system.” (RELATED: Google Is Lawyering Up In Europe After Record Fines)

Nevertheless, the EU concluded in a report that Google conducts unfair maneuvers to dominate three markets: “general internet search services, licensable smart mobile operating systems and app stores for the Android mobile operating system.”

Vestager said in April that a third investigation (aside from the most recent two in roughly the last year) into Google’s AdSense advertising service and if it obstructs rivals is advancing, meaning another massive fine could be imminent.

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