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Android access: EU levies $5-billion fine on Google

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Google received a record €4.3-billion ($5 billion) antitrust fine from the European Union and was ordered to change the way it puts search and web browser apps on Android mobile devices, reports Bloomberg. More significantly, Google was given 90 days to stop what the EU said were “illegal practices” on contracts with handset manufacturers that push Google services in front of users.

Google immediately said it would challenge the ruling at the EU courts.

The EU’s decision would bring the running total of Google fines to about €6.7
billion. Last year, Google faced a then-record €2.4-billion penalty following an investigation into shopping-search service. Wednesday’s fine could soon be followed by more from a probe into online advertising contracts.

The penalty — the same amount the Netherlands contributes to the EU budget every year — is far higher than any other dished out by the US, Chinese or other antitrust authorities. More significantly, Google was given 90 days to stop what the EU said were “illegal practices” on contracts with handset manufacturers that push Google services in front of users.

“Google has used Android as a vehicle to cement the dominance of its search engine,” EU Competition Commissioner Margrethe Vestager told reporters. “These practices have denied rivals the chance to innovate and compete on the merits.”

Google has built a massive business of banner and videos ads, thanks largely to its central role on Android devices. Google will account for a third of all global mobile ads in 2018, according to research firm eMarketer, giving the company around $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.

Google immediately said it would challenge the ruling at the EU courts. An appeal wouldn’t change its need to comply with the EU order, unless it gets judges to allow “interim measures” that halt the commission findings. In a statement posted online, Google CEO Sundar Pichai said the EU decision “rejects the business model that supports Android, which has created more choice for everyone, not less.”

Vestager said it was “solely” up to Google to determine how it can comply with the EU order. She said “you could have a theory that prices would go up, but it’s just as likely that prices can come down” after the forced changes. But when asked by Bloomberg television, she said “the obvious minimum” is that the “contractual restrictions disappear.”

The EU’s move would bring the running total of Google fines to €6.7-billion. Last year, Google faced a then-record €2.4-billion fine after a probe into shopping-search service. This fine could be followed by more from a probe into online advertising deals.

Vestager explained the fine’s size by saying it’s based on illegal behaviour that stretches back to as far as 2011 and that the firm’s “turnover has developed a lot over these years,” repeating that it’s been levied for “very serious illegal behaviour.”

Alphabet generated about the same amount as the record penalty every 16 days in 2017, based on its annual revenue of $110.9 billion for the year. Its shares were down 0.5% in pre-market trading in New York on Wednesday. The EU said Google ensures Google Search and Chrome are pre-installed on “practically all Android devices” sold in Europe. Users who find these apps on phones are likely to stick with them and “do not download competing apps in numbers that can offset the significant.

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