European authorities have slapped Google with a record $5.1 antitrust fine. The fine comes after European regulators judged that Google had abused its power in the mobile market. The ruling also forces the search giant to alter its practices.
The new fine is almost double what the union sanctioned Google last year after it deemed that the company was unfairly favoring its own services on its search engine.
The severity of the ruling signals the EU’s firm stance against American tech firms and comes at a delicate time when the US and the EU are embroiled in a tariff war – Trump has already tweeted that the EU is taking advantage of American companies in response.
Five billion dollars may seem like a huge sum, but it represents two week’s worth of revenue for Google; its parent company, Alphabet Inc, has cash reserves of almost $140 billion. The real problem for Google going forward will be complying with courts orders to halt anti-competitive practices in contractual deals with smartphone makers and telecoms providers.
In layman’s terms, Google can’t strike deals with phone makers, such as Samsung, to ship their Android-powered phones with two pre-installed Google apps: the Chrome browser and Google’s search app.
Google has over 90% of the global search engine market and around 60 percent of the browser market.
Failing to adhere to the new policy would incur penalties of up to 5% of Alphabet’s average daily worldwide turnover. Google must comply within 90 days.
This is huge. The EU’s stipulation could drastically weaken Google’s grip over the Android ecosystem.
Finally, the ruling also stipulated that phone makers will be able to fork the open-source version of Android and still be allowed to ship it with Google’s Android software. Prior to the ruling, makers that opted to fork the OS would not be able to integrate with Google’s Play Store, the gateway to a massive Android apps ecosystem.
Google announced that it would appeal the decision, which means that the case could drag on for years. The company will have to deposit the fine in a holding account until the appeal process concludes. The appeal will not have any effect on the EU’s request to unbundle Google services from its mobile OS.
Some have voiced their discontent with the ruling, claiming that it’s already probably too late to shake Google’s near monopoly over the mobile software market.
“Android has already helped establish Google apps and services as essentials for consumers in the Western World,” explains Ben Wood, chief of research at CCS Insight. “While the separation of apps from the operating system may help foster competition over the longer term, manufacturers will continue to need to offer Google services to be competitive and address consumer demand.”