Friday, 19 October, 2018

Google hit with €4.3 billion fine by European Union over antitrust breach

Margrethe Vestager European Commissioner in charge of competition policy.               European Commission Margrethe Vestager European Commissioner in charge of competition policy. European Commission
Scott Davis | 19 July, 2018, 10:25

The EU hit Google with its biggest ever fine on Wednesday (Jul 18), imposing a €4.34 billion (US$5 billion) penalty on the United States tech giant for illegally abusing the dominance of its operating system for mobile devices.

Vestager has also ordered a series of measures against other U.S. companies over tax practices in some European Union states, notably demanding two years ago that the Irish government take back up to 13 billion euros from Apple Inc.

"In this way, Google has used Android as a vehicle to cement the dominance of its search engine". These practices have denied rivals a chance to innovate and to compete on the merits. "They have denied European consumers the benefits of effective competition in the important mobile sphere", EU antitrust chief Margrethe Vestager's boss, Commission President Jean-Claude Juncker said.

The source said Competition Commissioner Margrethe Vestager would confirm the antitrust fine, which is almost double the previous record 2.4 billion euro fine which the USA tech company received past year over its online shopping search service. "This harmed competition by significantly reducing their incentives to pre-install competing search apps". Also true. What he doesn't address is how not agreeing (and thereby missing out on the Google payout and losing the right to install the Play Store) might affect that manufacturer's business.

The big question-is this heavy fine sufficient to deter Google?

An infographic on the case published by the European Commission               European Commission
An infographic on the case published by the European Commission European Commission

Alphabet, which is scheduled to report financial results on Monday, said it would set aside money to pay the fine which would cut its second-quarter profit by about US$5 billion.

A hot potato: The European Commission said Google must become compliant within 90 days or face penalty payments of up to five percent of the average daily worldwide turnover of parent company Alphabet.

Google had shut out rivals by forcing major smartphone makers, including South Korea's Samsung Electronics Co and China's Huawei Technologies Co (華為), to pre-install its search engine and Google Chrome browser, thereby freezing out rivals, Vestager said. "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 favour of proprietary systems over open platforms". This EU fine is the largest ever issued to Google, and previous year the company was served with a $2.7 billion Dollars penalty over manipulated search results.

He added that while products like Search are often preloaded by smartphone manufacturers (presumably to gain access to Google Play, the core of Vestager's argument), users can disable or delete them in favour of choosing other apps instead. Google Europe has issued a statement confirming they will appeal the decision. Finally, Google has prevented manufacturers wishing to pre-install Google apps from selling "even a single smart mobile device" running on alternative, non-Google-approved versions of Android, the regulators have found.




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