Tech giant Google was just hit with a record-breaking $5.1 billion fine by regulators for violating the EU Antitrust Rules.
According to a statement released by the European Commission, Google has been found guilty of breaching the EU Antitrust Rules. The commission claimed that the search engine giant had forcefully dominated general internet search trends by imposing illegal restrictions on Android manufacturers and mobile network operators.
“Today, mobile internet makes up more than half of global internet traffic. It has changed the lives of millions of Europeans. Our case is about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to the Google search engine,” EU Commissioner Margrethe Vestager said.
“In this way, Google has used Android as a vehicle to cement the dominance of its search engine. These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules,” she added.
To date, Google requires manufacturers to pre-install the Google search app and Chrome browser to acquire the license for the Google Play Store. The company also pays manufacturers and mobile network operators a considerable amount “on condition that they exclusively pre-installed the Google Search app on their devices.”
Also, the EU Commission found in its investigation that Google prevented manufacturers who want to pre-install Google applications from selling smart mobile devices running on alternative versions of Android known as “Android forks”.
Regulators said that Google’s strategy has allowed it to dominate markets for “general Internet search services, licensable smart mobile operating systems, and apps stores for the Android mobile operating system.”
While market dominance is deemed legal under the EU antitrust rules, dominant companies are prohibited from abusing their powerful market positions. This abuse of power includes restricting competition either in separate markets or markets where they are deemed dominant.
Google was explicitly charged with:
- Illegal tying of Google’s search and browser apps
- Illegal payments conditional on exclusive pre-installation of Google Search
- Illegal obstruction of development and distribution of competing Android operating systems
The company failed to win the antitrust case and was therefore slapped with the multibillion-dollar fine which was calculated based on the duration and gravity of the infringement. The U.S.-based company is now being required by the commission to end its “illegal conduct” within 90 days of the decision.
Simply put, Google has to unbundle its Chrome browser and search applications from Android, which will drastically change the “free business model” that the tech company has been pushing for with the mobile OS.
In a blog post, Google CEO Sundar Pichai has defended the company’s business model, citing:
“We’ve always agreed that with size comes responsibility. A healthy, thriving Android ecosystem is in everyone’s interest, and we’ve shown we’re willing to make changes. But we are concerned that today’s decision will upset the careful balance that we have struck with Android, and that it sends a troubling signal in favor of proprietary systems over open platforms.”