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7 Answers to the EU Record Penalty Against Google

The € 4.3 billion fine that the EU Commission has inflicted on the software company is the highest antitrust penalty the EU has ever imposed.

antitrust-penalty

The European Commission imposed a record fine of € 4.34 billion ($5bn; £3.9bn)  on Google on Wednesday. This is the highest antitrust penalty ever issued by the EU. Google is said to have abused its market dominance with the smartphone operating system Android.

At a press conference in Brussels, EU Competition Commissioner Margrethe Vestager announced, in addition to a record fine, conditions imposed on the US company to boost competition in the smartphone market. If Google does not change its behavior within 90 days, threatened further high fines. The investigations in this procedure ran already since 2015.

  1. What exactly is Google accused?

Google is said to have put pressure on other smartphone manufacturers using the Android operating system. Manufacturers such as Samsung, Huawei or HTC had to pre-install Google services such as the Chrome browser and Google Search on their Android devices to gain access to the Google Play Store. It’s the largest marketplace for Android apps, a trusted source for smartphone apps.

  1. What does Google have to do with Android?

The mobile operating system Android is developed by Google. Any technology company can use Android and build on this its own Android version. However, if a smartphone manufacturer wants access to the Play Store, he is not allowed to sell any devices running an Android offspring competing with Google. For example, this applies to Amazon’s Fire OS.

  1. What does Google say about this?

In a first reaction, Google announced it would appeal against the decision. The decision was not commented on. In the past, the Android manufacturer has repeatedly rejected the allegations. There is no link to the Google Play Store or the Google search engine. The mobile phone manufacturers, who pre-install Google search, are involved in the revenue of the search engine. The pre-installation of the Chrome browser is indeed mandatory, according to Google, but the smartphone manufacturers could install a second browser in parallel and set this as the default browser.

  1. What consequences could the penalty have for Google?

Google can easily pay the fine, but investors may not be pleased about it. Google’sparent company Alphabet posted net income (after tax) of $ 12.6 billion in 2017, and the current EU fine is $ 5 billion.

  1. What impact could the penalty have on Android users?

The EU requires Google to change its practice of using Android, which could have a massive impact on the Android ecosystem. It is conceivable that in the future, other Android modifications, such as Amazon’s Fire OS, could get access to the Play Store. How Google reacts to the EU decision remains to be seen.

  1. How does the competition see it?

“In the analog world, no one would think of allowing a powerful corporation, such as Nestlé, to take over the infrastructure and shop floor of most supermarkets and make it available to supermarket operators for free on the condition that they offer no Nestlé competing products.” , criticizes the European competitor Cliqz, a provider of browsers and search engines. “The decision to force an opening of the market-dominating Android platform for other providers is long overdue.”

  1. What is Apple doing differently?

For Apple and its iPhones, things are completely different. Both iPhones and iPads, as well as the mobile operating system iOS and the associated App Store, are from Apple. There are no other manufacturers who have the Apple operating system installed on their smartphones or who have access to the Apple App Store. In the closed Apple ecosystem, the company is not dependent on other manufacturers, so it can – more or less – do what it wants.

In the past, the EU Commission has taken curbs on numerous tech companies and imposed harsh penalties for unauthorized price fixing or exploitation of their market dominance. No other company has been penalized to such high penalties as the technology company Google.

The current fine of 4.3 billion euros outshines all previous competition penalties. Just over a year ago, the EU Commission imposed a fine of 2.42 billion euros against Google. In the current process, Android is in focus, last year was about the search engine or the price comparison service Google, which was deliberately preferred in the search results. The results of the competitors Google has ranked in the search results. According to the Competition Commissioner, Google has thus obtained an “unlawful advantage”.

Money for the EU budget

Google has lodged an appeal against the decision and has already filed the fine. However, the EU can not access the money because the final decision is still pending. If Google actually has to pay the fine, the money will go into the EU budget. A purpose dedication, such as for the promotion of digitization in Europe, is not provided.

Tech companies in focus

Only at the beginning of the year was a cartel sentence against the US chip manufacturer Qualcomm pronounced. According to the company should pay 997 million euros, because it is Apple paid for years to use no chips from other manufacturers. Another US chip manufacturer called the EU authorities on the plan. Against Intel was issued a fine in the amount of 1.06 billion for anti-competitive behavior with computer processors in 2009.

Microsoft is already an old acquaintance at the EU Commission: The antitrust authorities have already fined the technology company three times. Because it was not possible for Windows users to freely select the browser, the condemned the software company in 2013 to a fine of 561 million euros. Already in 2004, Microsoft had to pay a fine in the amount of 497 million euros, because the company has exploited its supremacy around the Windows operating system for its own benefit.

 

About the author

Vikram

Vikram is a Digital Media Strategy Consultant who helps small business owners grow their
business. He is passionate about blogging, digital marketing, and emerging technologies.

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