Google Hit With $5B Fine From EU Over Android Practices


The European Union's antitrust regulator, the European Commission, has as expected stepped up its battle over Google's search engine practices with a $5.05 billion fine against Google parent company Alphabet.

The Commission on Wednesday announced the record fine as a response to Google "breaching EU antitrust rules" by imposing "illegal restrictions" on Android device makers and mobile network operators, allegedly aimed at bolstering Google's search engine.

[Related: Google Hit With $2.7 Billion Fine By European Commission For Giving Itself An 'Illegal' Shopping Service Advantage]

The practices have been going on since 2011, the Commission said. Among the practices under scrutiny are a requirement that device makers pre-install Google's search app and Chrome browser app, in exchange for being able to include access to the Google Play Store on devices, according to the Commission.

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The Commission also alleges that Google has made payments to device makers and mobile network operators to exclusively pre-install Google's search app—and has prevented device makers from using Android versions that are not approved by Google, as a condition of being able to pre-install Google apps.

Google makes the source code for its Android operating system open and freely available to device makers. Roughly 80 percent of devices in Europe and worldwide run Android, according to the Commission.

The organization's commissioner, Margrethe Vestager, said in a statement that 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," she said. "They have denied European consumers the benefits of effective competition in the important mobile sphere."

The action follows a $2.7 billion European Commission fine against Google just over a year ago, which accused Google of unfairly favoring results from its own shopping service in its search engine.

For the latest fine, the Commission said that Google must "bring the conduct effectively to an end within 90 days" or face additional penalties of up to 5 percent of Alphabet's average daily revenues.

In a statement responding to the fine, Google CEO Sundar Pichai said that the company intends to appeal the European Commission decision.

The decision "ignores the fact that Android phones compete with iOS phones," he said, while missing "just how much choice Android provides" to device makers, mobile operators, developers and consumers.

"Today, because of Android, there are more than 24,000 devices, at every price point, from more than 1,300 different brands," Pichai said.

"The phones made by these companies are all different, but have one thing in common—the ability to run the same applications. This is possible thanks to simple rules that ensure technical compatibility, no matter what the size or shape of the device," he said. "No phone maker is even obliged to sign up to these rules—they can use or modify Android in any way they want, just as Amazon has done with its Fire tablets and TV sticks."

Additionally, Pichai suggested that Google may begin to charge device makers for using Android if the European Commission decision is allowed to stand.

"If phone makers and mobile network operators couldn't include our apps on their wide range of devices, it would upset the balance of the Android ecosystem," Pichai said. "So far, the Android business model has meant that we haven't had to charge phone makers for our technology, or depend on a tightly controlled distribution model."

However, he added, "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 favor of proprietary systems over open platforms."