Published: Wed, July 18, 2018
IT | By Lester Massey

Google fined $5 billion by EU, told to alter Android model

Google fined $5 billion by EU, told to alter Android model

In the EU's sharpest rebuke yet to the power of a handful of tech giants, the bloc's antitrust regulator found Wednesday that Google had abused the dominance of its Android operating system, which runs more than 80% of the world's smartphones, to promote and entrench its own mobile apps and services, particularly the company's search engine.

European Union rules say Google could be fined up to 10 percent of parent company Alphabet's annual revenue, which hit $110.9 billion in 2017.

The source said Competition Commissioner Margrethe Vestager would confirm the antitrust fine, which is almost double the previous record 2.4 billion Euro fine which the USA tech company received past year over its online shopping search service.

Google said it will appeal against the levy.

Shares in Alphabet, the company's parent, fell as much as 1.1% in premarket trading Wednesday after the size of the fine was reported. "A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition", it said. Google raked in around €25 billion in digital advertising in Europe past year, according to estimates from equity research firm Pivotal Research.

Google Search and Chrome are as a result pre-installed on the "significant majority" of devices sold in the EU, the European Commission says. More significantly, the European Union has also ordered Google to allow phone manufacturers and telecom operators to allow non-Google apps on Android devices.

"The fine is based on the length of the infraction, but also on whether antitrust authorities believe there was an intention to commit the offence, and whether they excluded competitors or not", said a source. Google licenses its Android mobile operating system to third-party manufacturers of mobile devices. "They have denied European consumers the benefits of effective competition in the important mobile sphere", Vestager said. The company also has maintained that it never stopped Android users from downloading rival services if they preferred.

These practices have denied rivals the chance to innovate and compete on the merits. "We will appeal the Commission's decision".

The watchdog opened its investigation into Android in 2015, following a complaint two years earlier from the lobbying group FairSearch.

Vestager is expected to announce that Google abused its dominant position in the market by making tie-ups with phone makers like South Korea's Samsung and China's Huawei.

An official tweet from the European Commission account said, "We are fining Google €4.34 billion for illegal practices regarding Android mobile devices to strengthen dominance of Google's search engine".

"The decision does not prevent Google from putting in place a reasonable, fair and objective system to ensure the correct functioning of Android devices using Google proprietary apps and services, without however affecting device manufacturers' freedom to produce devices based on Android forks".

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