Earlier this year, the European Commission fined internet giant Google with €4.3 billion for abusing its vast monopoly in mobile phone operating systems, namely Android.
It concluded that Google “…used Android as a vehicle to cement the dominance of its search engine” in a landmark case resulting in a record fine, calculated from Google’s revenue in the EEA. The EU Competition Commissioner said that Google had “denied rivals the chance to innovate and compete”.
This is the largest fine ever imposed by the Commission for anti-competitive behaviour, following close supervision of Google over the last eight years.
Second Huge Fine
In 2017, the Commission concluded their first investigation of Google with a €2.4 billion fine after determining that Google was unfairly manipulating online shopping. They are also currently investigating possible anti-competition behaviour concerning the search bar and adverts.
Google has announced that it has plans to appeal the most recent ruling. Google’s alleged abuse of dominance in relation to the Android mobile operating system is that, as the operating system used by 80% of the world’s smartphones, Google already holds a dominant market position.
When new versions of Android are released, Google publishes the source code online, which, in theory, means that third parties can make changes to the code, license and run Android on their devices.
However, certain manufacturers must engage in a contract with Google which determines which apps are installed on devices before they are sold.
Pre-installation like this can create a status-quo bias, which means that users are more likely to stick with the Google products already on their phones than search for alternatives by competitors. This was the issue that the European Commission had, as Google imposes a number of contractual restrictions, including:
- Requiring manufacturers to pre-install Chrome, as a condition for licensing Google’s Play Store;
- Making payments to manufacturers and operators providing they exclusively pre-installed the Google Search app on their devices; and
- Preventing manufacturers from selling smart devices running on alternative versions of Android that were not approved by Google
Although market dominance itself is not illegal, EU anti-trust rules say that dominant companies have a responsibility not to abuse this powerful position. The European Commission found that these restrictions were an abuse of Google’s market power by breaching three rules – illegal tying, illegal payments, and illegal obstruction. This was then upheld in the Commission’s decision of 18 July 2018, though Google has denied any wrongdoing.
If Google fails to ensure compliance with the Commission’s decision, they could be faced with further fines of up to 5 per cent of daily revenues. The heavy-handed approach with Google shows that regulators like the European Commission are willing to take on tech giants – nobody is too big.