EC fines Google a record $6.8bn over Android

The European Commission has imposed a record €4.34 billion ($6.8 billion) fine on Google as part of its investigation into the company’s Android licensing practices.

The commission has also given Google 90 days to bring an end to ‘illegal restrictions’ imposed on Android device makers and mobile operators or face ongoing fines of up to 5% of parent company Alphabet’s daily revenue.

European Commissioner in charge of competition policy Margrethe Vestager said Google has used Android as a vehicle to cement its search engine dominance by imposing restrictions that ensure traffic on Android devices goes through Google Search.

In particular, the EC took issue with Google’s licensing policy requiring manufacturers to pre-install Google Search and the company’s Chrome browser if they want to provide access to the Play app store.

Google had also previously made payments to large device makers and mobile operators on the condition that they exclusively pre-install Google Search on their devices, and these payments were large enough that smaller rivals could not match them and still make a profit. The EC noted that Google stopped this practice in 2014 after the commission started to look into the issue.

Finally, the licensing terms prevent manufacturers wanting to pre-install Google apps from selling even a single smartphone or other device running on unapproved Android forks, such as Amazon’s Fire OS.

The commission found that Android is dominant in the global market outside of China for licensable mobile operating systems, and that competition from Apple and Blackberry at the downstream end of the market has no impact on this market dominance.

The impact of Google’s practices has been to harm competition and innovation in the mobile space due to preventing other mobile browsers from effectively competing with Chrome, the EC said.

The EC also recently fined Google €2.42 billion for allegedly unfairly favouring search results from its own comparison shopping service over those provided by rivals.

In a statement, Google CEO Sundar Pichai denied allegations that its Android licensing practices have inhibited competition. He said the policies around Android forks and access to Google apps are designed to protect Android’s baseline compatibility.

“To be successful, open-source platforms have to painstakingly balance the needs of everyone that uses them. History shows that without rules around baseline compatibility, open-source platforms fragment, which hurts users, developers and phone makers. Android’s compatibility rules avoid this and help make it an attractive long-term proposition for everyone,” he said.

Pichai added that the EC’s decision threatens to inhibit the Android ecosystem and, more broadly, the viability of open-source platforms as an alternative to proprietary systems.

“Rapid innovation, wide choice and falling prices are classic hallmarks of robust competition and Android has enabled all of them,” he said.

“Today’s decision rejects the business model that supports Android, which has created more choice for everyone, not less. We intend to appeal.”

Image credit: ©stock.adobe.com/au/ArtemSam

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