European Union Levels $5 Billion Fine for Antitrust Behavior on Google

Citing illegal restrictions on Android that assure that Google apps are installed on new phones, the European Union today have leveled a massive €4.34 Billion, or $5.06 Billion fine against Google.  It is the largest fine ever given to a company by the EU, with Google already owning the now second largest fine which was issued last June.  That fine was $2.7 Billion.

The crux of the issue that the European Union has with Google in this fine is around Android and specifically how contracts with manufactures are written around the platform.  The EU took exception to the fact that these contracts require that OEMs pre-install Google apps.  The Union sees this as anti-competitive and wants it to stop.

Their argument is that by requiring pre-installed apps, Google is forcing OEMs to use them and thus it doesn’t encourage development of other apps and services from theses OEMs.  Further, the EU argues that this discourages end users from looking for other apps and services since Google is providing them already on the phone – via these contracts.

In their rebuke of the decision, Google’s CEO Sundar Pichai indicated that the EU missed the point and that they will appeal the decision

Today, the European Commission issued a competition decision against Android, and its business model. The decision ignores the fact that Android phones compete with iOS phones, something that 89 percent of respondents to the Commission’s own market survey confirmed. It also misses just how much choice Android provides to thousands of phone makers and mobile network operators who build and sell Android devices; to millions of app developers around the world who have built their businesses with Android; and billions of consumers who can now afford and use cutting-edge Android smartphones.

The Mountain View company’s perspective is that Android has created more opportunity for innovation rather than stymie it.

While the appeal process is likely going to take months, the size of the fine is not an insignificant amount.  $5 Billion accounts for roughly 40% of the company’s profits in 2017.

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