The European Commission (EC) has fined Google €4.34 billion for breaching EU antitrust rules by imposing restrictions on Android device makers and network operators "to cement its dominant position in general internet search".
Google must now bring this conduct to an end within 90 days or face penalty payments of up to 5 percent of the average daily worldwide turnover of Alphabet, Google's parent company, the EC said. Google has said it will appeal the EC decision.
European Commissioner Margrethe Vestager, in charge of competition policy, said: "Our case is about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to the Google search engine. 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."
The EC said that Google had:
- required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google's app store -- the Play Store
- made payments to some large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices;
- prevented manufacturers wishing to pre-install Google apps from selling any smart mobile device running on 'Android forks', alternative versions of Android that were not approved by Google.
A Google spokesperson said: "Android has created more choice for everyone, not less. A vibrant ecosystem, rapid innovation, and lower prices are classic hallmarks of robust competition. We will appeal the Commission's decision."
Today, about 80% of smart mobile devices in Europe, and worldwide, run on Android.
"The Commission decision concerns three specific types of contractual restrictions that Google has imposed on device manufacturers and mobile network operators. These have enabled Google to use Android as a vehicle to cement the dominance of its search engine. In other words, the Commission decision does not question the open source model or the Android operating system as such," it said.
The EC said that Google offers its mobile apps and services to device manufacturers as a bundle, which includes the Google Play Store, the Google Search app and the Google Chrome browser. Google's licensing conditions make it impossible for manufacturers to pre-install some apps but not others. The EC decision concluded that Google has engaged in two instances of illegal tying: the the tying of the Google Search app, which ensured that its Google Search app is pre-installed on practically all Android devices sold in Europe, and the tying of the Google Chrome browser, which also ensured that its mobile browser is pre-installed on nearly all Android devices sold in the Europe.
"Browsers also represent an important entry point for search queries on mobile devices and Google Search is the default search engine on Google Chrome. The Commission found this tying conduct to be illegal as of 2012, which is the date from which Google has included the Chrome browser in its app bundle," it said.
- Android P: Cheat sheet (TechRepublic)
Users who find search and browser apps pre-installed on their devices are likely to stick to these apps, said the EC, noting that the Google Search app is consistently used more on Android devices, where it is pre-installed, than on Windows Mobile devices, where users must download it.
"Google's practice has therefore reduced the incentives of manufacturers to pre-install competing search and browser apps, as well as the incentives of users to download such apps. This reduced the ability of rivals to compete effectively with Google," the EC said.
The EC said Google granted "significant financial incentives" to some of the largest device manufacturers, as well as mobile network operators, on condition that they exclusively pre-installed Google Search across their entire portfolio of Android devices. "This harmed competition by significantly reducing their incentives to pre-install competing search apps", the EC said, but noted this practice ended in 2014.
The EC also said Google has prevented device manufacturers from using any alternative version of Android that was not approved by Google (Android forks) and said this reduced the opportunity for devices running on Android forks to be developed and sold.
"For example, the Commission has found evidence that Google's conduct prevented a number of large manufacturers from developing and selling devices based on Amazon's Android fork called "Fire OS"," it said.
The Commission decision requires Google to bring its illegal conduct to an end in an effective manner within 90 days of the decision. It said that "at a minimum", Google has to stop and to not re-engage in any of the three types of practices. The decision also requires Google to refrain from any measure that has the same or an equivalent object or effect as these practices.
If Google fails to ensure compliance with the Commission decision, it would be liable for non-compliance payments of up to 5% of the average daily worldwide turnover of Alphabet, Google's parent company. "The Commission would have to determine such non-compliance in a separate decision, with any payment backdated to when the non-compliance started," it said.
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