EU Fines Google $5 Billion Over Illegal Android Practices

The European Commission announced a 4.34 euro (~$5 billion) fine against Google as a conclusion to its antitrust investigation into the company’s abuse of Android's dominance in the smartphone market.

Last year, the EC imposed another $2.7 billion fine, the largest in EU history at the time, against Google over market abuse in search. The EC has another antitrust case against Google opened over alleged abuse of the company’s AdSense network.

Google’s Android Abuses

The EC alleged that Google used Android's dominance in the European Union to further strengthen its lead in search, a practice that is illegal in the EU.

More specifically, Google is said to have used its control over Android to require manufacturers to install the Google Search app and Chrome browser in all Android devices if they wanted a Play Store license. Additionally, the company made payments to larger manufacturers on the condition that they exclusively pre-install the Search app, rather than installing apps from other search tools.

The EC alleged that even though the core Android OS is open source, Google prevented manufacturers from pre-installing its apps if they installed a version of Android that wasn’t pre-approved by the company. Android manufacturers who wanted to pre-install Google's apps couldn’t use Amazon’s Android fork, for instance, and could only use Google’s version of Android.

The EC also said that Google invested in Android because it anticipated users' shift from the desktop to mobile devices, so it planned all along to use Android’s dominance to protect its search business as that shift happened.

Android has an 80% market share among mobile operating systems and a 95% market share in “licenseable mobile operating systems,” a market which doesn’t include vertically integrated operating systems such as iOS or Blackberry OS because those can’t be licensed by manufacturers. Google’s search market share in the EU is over 90% in most countries.

The EC investigated whether or not the iOS competition is sufficient to restrain Google from certain market abuses, but it discovered that it’s not for the following reasons:

Customers are influenced by a variety of factors, such as hardware features, when buying a smartphone
Apple devices are priced at the high-end of the spectrum, so they are inaccessible to most customers
There is a switching cost between operating system so users can’t easily switch from Android to iOS or viceversa
Google’s search business would not be significantly harmed even if Android users did switch to iOS, because Google also has deals with Apple to implement Google search on iOS.

In a statement, the EC said:

"Google's practices also harmed competition and further innovation in the wider mobile space, beyond just internet search. That's because they prevented other mobile browsers from competing effectively with the pre-installed Google Chrome browser. Finally, Google obstructed the development of Android forks, which could have provided a platform also for other app developers to thrive."

Google’s Response

In a blog post, Google CEO Sundar Pichai argued that Android has expanded choice for users, not lowered it. The main argument seems to rely on the fact that iOS exists and that Android has enabled many app developers, including European ones, to make a living through the platform. Pichai also mentioned that there are over 24,000 Android smartphone SKUs from 1,300 phone maker brands currently.

Pichai added that the restriction against Android forks was needed in order to keep Android app compatibility among all Android devices. However, that’s should not necessarily be up to Google, and even so, the main issue is that Google also requires OEMs to install other Google apps alongside the Play Store.

This is one of the main abuses that the EC mentioned, because it prevents competition from other search services or browsers such as Firefox to gain significant market share on Android. In other words, it’s the same antitrust issue that Microsoft created when it pre-loaded Internet Explorer on Windows.

Google said that it will appeal the $5 billion fine. In the meantime, the EC has given Google 90 days to end all the illegal practices or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google's parent company.

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Lucian Armasu is a Contributing Writer for Tom's Hardware US. He covers software news and the issues surrounding privacy and security.

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44 Comments Comment from the forums

hotaru251

"because it prevents competition from other search services or browsers such as Firefox to gain significant market share on Android."

Becasue if someone WANTED to use firefox they wouldnt just download the app for it themselves....

i am sorry but ALL OS devices come with w/e brand of search engine is popular.

Google IS the #1 search so itm akes sense to put it on android OS...

also theydo not forbid other searches from being put on the OS.

I honestly feel that google got robbed on this specific lawsuit :/
Reply
jimmysmitty

The EU fines keep going up and up and up. I find these reasons hard to justify as well. The OS is Googles and they should be able to have it set to default with their basic apps. If another company objects they can create their own phone OS, like Samsung was going to try to. Hell Samsung bakes in their own store app in Android and some of their apps are tied to it.

The entire idea of a good free market is that competition will come when needed and if the competition is good the market will innovate and thrive. Look at CPUs. For many years AMDs competition was poor or non-existent. Now they are competing very well and Intel is going to have to push back with better innovations. It didn't require anything but AMD to create a good product. The same can be seen in many markets where companies would have poor products but then good products come out and the market thrives.

The EU trying to force competition or an even playing field wont happen. It never works that way. The reason Android is the most dominant phone OS is because it was the best one for the majority and nothing has come close to beating it yet, even though I do like Windows phone mobile that phone OS has/had poor hardware behind it.

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madbiker

The EU has practiced extortion before and I feel as if Microsoft, Google , etc should simply tell they to F@%k themselves and or no longer offer their products to EU specific areas.
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Non-Euclidean

JIMMYSMITTY:
For many years AMDs competition was poor or non-existent. Now they are competing very well and Intel is going to have to push back with better innovations. It didn't require anything but AMD to create a good product.
_____________________

Err, not quite. Intel paid millions to PC makers so they wouldnt use AMD processors. Look it up.
Reply
wysir

Wow. The EU is really digging deep for this BS. The Android OS is free. If Google wants to put some minor stipulations to use some of its features, that's their business. It's not hurting the consumer nor the phone manufacturer.

What if Google said, "We aren't paying this fine"? Would the EU go for blood and attempt to ban the Android OS for the whole region? If they did, the citizens and 80% smart phone user base would be livid, being forced into a different mobileOS for such stupidity and it would cause major backlash on the EU.
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Long__T123

So is the eu going to go after Microsoft next for preloading internet explore and the windows store on windows 10?
Reply
newsonline.4000000

21152420 said:
The EU fines keep going up and up and up. I find these reasons hard to justify as well. The OS is Googles and they should be able to have it set to default with their basic apps. If another company objects they can create their own phone OS, like Samsung was going to try to. Hell Samsung bakes in their own store app in Android and some of their apps are tied to it.

The entire idea of a good free market is that competition will come when needed and if the competition is good the market will innovate and thrive. Look at CPUs. For many years AMDs competition was poor or non-existent. Now they are competing very well and Intel is going to have to push back with better innovations. It didn't require anything but AMD to create a good product. The same can be seen in many markets where companies would have poor products but then good products come out and the market thrives.

The EU trying to force competition or an even playing field wont happen. It never works that way. The reason Android is the most dominant phone OS is because it was the best one for the majority and nothing has come close to beating it yet, even though I do like Windows phone mobile that phone OS has/had poor hardware behind it.

Huge US companies will always buy anything they see as a threat in the market. we need laws to protect us from huge whales in the market that prevent competition. Google Bought Android in 2005 , Apple Bought Siri , and so on ...

I prefer Siri to be an APP for all OS instead of Apple buying it and making it only for Apple.

The Same For Android , I prefer Android to be a another company that becomes bigger and bigger each year. not for Google to buy it.

In the last 20 years , everything promising is being sold to bigger companies. and this is not good for competition at all.
Reply
stdragon

And Apple's iOS walled garden isn't? Someone got bought and paid for at in the EU to pull a stunt like this.

Follow the money.
Reply
shrapnel_indie

21152416 said:
"because it prevents competition from other search services or browsers such as Firefox to gain significant market share on Android."

Becasue if someone WANTED to use firefox they wouldnt just download the app for it themselves....

i am sorry but ALL OS devices come with w/e brand of search engine is popular.

Google IS the #1 search so itm akes sense to put it on android OS...

also theydo not forbid other searches from being put on the OS.

I honestly feel that google got robbed on this specific lawsuit :/

Yet, at the same time, like Microsoft and IE integration and inclusion, many users won't bother. Many users won't realize there is an alternative. Also, like integrated IE, you can't just uninstall it, it won't let you.

Google's practice on this is reminiscent of Microsoft's anti-competitive leveraging over the last few decades. Did you have issues as well when MS got slammed for it?

Yeah, the fine may be steeper than necessary. Yeah, it may be extortion in how the fines are working. Yet, we the consumers haven't helped mandating that Google Play be included in the OS, which will not happen in the full Open Source version of Android that exists. (You can say, just like Chromium is to Chrome, that one is to Android as we all use it... open source, until Google gets it and packs it with licensed proprietary elements it then requires to be present in its distro that we all want.)
Reply
drojdier

21152416 said:
"because it prevents competition from other search services or browsers such as Firefox to gain significant market share on Android."

Becasue if someone WANTED to use firefox they wouldnt just download the app for it themselves....

i am sorry but ALL OS devices come with w/e brand of search engine is popular.

Google IS the #1 search so itm akes sense to put it on android OS...

also theydo not forbid other searches from being put on the OS.

I honestly feel that google got robbed on this specific lawsuit :/

You cannot even make the distinction between a web browser and a search engine and think you're capable of judging over a monopoly lawsuit because you managed to read an article's title?

21152420 said:
The EU fines keep going up and up and up. I find these reasons hard to justify as well. The OS is Googles and they should be

The fines go up and up because it appears no lessons had been learned from previous, lower, fines. Its similar to increasing penalties for recidivists in criminal cases, it's completely normal.

And no, android is not google's, it's open source. It was (and is) built on Linux kernels that google does not and cannot own.

What about all the shit bloatware apps (e.g. google newspaper) that google forces you to have on your phone without being able to uninstall unless you rootkit (thus voiding warranty) your phone? Is that still nice and fair? Stop being knee jerk white knights and be happy that colossal corporations are being challenged and called to abide existing laws that are not negotiable no matter what your personal preferences are. You're basically angry because EU is asking google to respect laws of whose existence the corporation was fully aware of. What is wrong with you?
Reply