The European Union is going hard against Internet giant Google, calling out unfair business practices. In the latest in an ongoing clash, the European Commission has fined Google with a whopping $5 billion fine. The Commission states Google is abusing its Android market dominance in the mobile industry in three different areas.
- First off, as a condition for licensing the Google Play Store, the company requires manufacturers of Android phones to pre-install their proprietor Search app and company’s browser, Chrome.
- The EU also accuses Google of making payments to some large manufacturers under the condition that they only pre-install the Google Search app.
- Finally, Google allegedly prevented manufacturers from selling smartphones with alternative (or “forked”) versions of Android.
Because of the reasons above, Google was fined 4.34 billion euros over violating EU antitrust rules, an amount that translates to $5.06 billion. Google has 90 days to amend this conduct in European territory or face penalty payments of up to 5% of the average daily worldwide turnover for Alphabet, its parent company.
Besides online giant Google, other Alphabet subsidiaries include research and development biotech company Calico, venture capital fund CapitalG and Google Fiber. In all, the Google parent company understandably manages a lot of money: in fact, the cash reserves of Alphabet totaled $109 billion at the end of March.
According to an official statement obtained by The Verge, Google is planning to appeal the EU decision. A representative for the company said Android “has created more choice for everyone, not less.” They claim the company’s open source-based operating system has opened doors for developers to come up with creative solutions.
What Does the EU Want from Google?
In all, the European Commission decision, which is available on this official press release, doesn’t require any massive changes to the Android Operating System. Just eliminating the “bundle” that comes from factory settings, which include proprietor Google apps that cannot be deleted, like Chrome and Google Search.
As it is, Google does not stop Android users from downloading alternative search engines or browsers. However, Competition Commissioner Margrethe Vestager stated it was a matter of unfair advantage, as users weren’t curious to try alternatives when already provided with one. Only 10% of users download a competing browser when in Android, and barely 1% go for an alternative search app since Google is already integrated.
Over half of Internet searches currently occur via mobile, and about 80% of smartphones run on Android. For the European Commission, that and the infractions above constitute a massive advantage towards Google. The company makes most of its revenue from its staple search engine. Another big chunk of revenue comes from advertising when consumers use the very apps that must be built into the OS, no matter the manufacturer.
The European Commission vs. Google
The current issue isn’t Google’s first brush with the EU. Just last year, the Commission hit the company with a $2.7 billion fine, also related to antitrust legislation in the European Union. At the time, it was the most substantial fine issued by the antitrust body, only surpassed by the current one.
The decision came about after a seven-year investigation from the Brussels-based Commission, which found abuse on the part of Google. That particular case stated that Google had “abused its dominance” in the search engine arena by giving advantages to the company’s shopping comparison service. Complaints from U.S. and European competitors claimed the company used its massively popular search engine to make Google Shopping more prominent than other retailers. This would all amount to a monopoly on Google’s part. Google is currently in the process of appealing against that first ruling.
According to the BBC, the European Commission is currently undergoing a third investigation into Google’s practices. This one focuses on AdSense, the company’s advert-placing business, another major source of revenue for the company. It would appear the EU is looking into every side of the current Google business model and its possible detriment to smaller competitors without its resources and popularity.
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