Google braces itself for multibillion-euro EU fine over Android

18 Jul 2018

Android statue at Googleplex in Mountain View, California. Image: Sundry Photography/Shutterstock

Google could be hit with a fine that equals up to 10pc of its annual revenues.

Google will learn today (18 July) if it faces a massive fine from the European Commission over whether it abused its dominant position in mobile with its Android operating system.

Google could be hit with a fine of close to €10bn and may be forced to unbundle pre-installed services such as Chrome or Google Play from Android.

‘Android means manufacturers don’t have to buy or build expensive mobile operating systems’

Android is the operating system that runs 85.9pc of smartphones in the world today, according to Gartner, and effectively this puts Google at the helm of an unparalleled search empire. Google licenses its Android mobile operating system to third-party manufacturers of mobile devices.

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European competition commissioner Margrethe Vestager began her antitrust action against Google in 2015, alleging that the internet giant was in breach of EU antitrust rules and abused its dominant position by imposing restrictions on Android device manufacturers and mobile network operators.

In 2016, Vestager said: “A competitive mobile internet sector is increasingly important for consumers and businesses in Europe. Based on our investigation thus far, we believe that Google’s behaviour denies consumers a wider choice of mobile apps and services, and stands in the way of innovation by other players, in breach of EU antitrust rules. These rules apply to all companies active in Europe.”

For its part, Google has denied it has abused this dominant position, saying it is not guilty of any wrongdoing.

Google senior vice-president Kent Walker retorted that Android has enabled the smartphone market to flourish in Europe and around the world.

“Android means manufacturers don’t have to buy or build expensive mobile operating systems. As a result, smartphones are now available at dramatically lower prices – as little as €45 – and have become much more accessible to many more people. Today, more than 24,000 devices from over 1,300 brands run on Android. And European developers are able to distribute their apps to over a billion people around the world. Android is not a one-way street, it’s a multi-lane highway of choice.”

Various reports suggest the fine that the EU could level against the Alphabet subsidiary could outstrip the €2.4bn charge imposed last year for allegedly favouring its own site in comparison-shopping searches. Google is appealing the latter fine.

If Brussels decides to use the full extent of its powers, it could hit Google with a fine that equals 10pc of its global turnover or around €9.8bn.

Vestager could also force Google to unbundle Chrome or Google Play services from Android installs, something she sees as Google illegally “tying” these apps to smartphones. She has alleged that mobile operators and device manufacturers were given financial incentives if they installed Google search and no other rival services.

Another aspect to the case relates to contractual restrictions that stopped manufacturers from selling phones with rival operating systems developed on Android open source code.

In a separate query, Vestager’s investigators are probing Google’s AdSense advertising business.

Crucially, the European Commission believes that these practices combined served to undermine the ability of rival browsers to compete with Google’s Chrome browser and obstructed the emergence of other operating systems.

Android statue at Googleplex in Mountain View, California. Image: Sundry Photography/Shutterstock

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years