European antitrust regulators have fined Google with a 4.34 billion euro ($5.04 billion) fine for abusing its position in the smartphone market to increase the dominance of its search engine, the European Commission announced in a statement Wednesday.
Google was ordered to stop the practice within 90 days or face further penalty payments of up to 5% of the average daily global turnover of its parent company, Alphabet.
European regulators say Google has required manufacturers to pre-install the Google Search app and Chrome app as a condition for licensing Google’s Play Store. The company also made payments to “large manufacturers and mobile network operators” in order for them to exclusively pre-install the Google Search app on their devices. Finally, Google has prevented manufacturers wishing to pre-install Google apps from selling “even a single smart mobile device” running on alternative, non-Google-approved versions of Android, the regulators have found.
The European Commission points out that it only deems these specific practices illegal, and “does not question the open source model or the Android operating system as such.”
Fine of €4,34 bn to @Google for 3 types of illegal restrictions on the use of Android. In this way it has cemented the dominance of its search engine. Denying rivals a chance to innovate and compete on the merits. It’s illegal under EU antitrust rules. @Google now has to stop it
— Margrethe Vestager (@vestager) July 18, 2018
“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,” EU Commissioner Margrethe Vestager said in a statement.
The size of the fine — a record for Google — “takes account of the duration and gravity of the infringement,” claims the European Commission. “It has been calculated on the basis of the value of Google’s revenue from search advertising services on Android devices in the EEA.”
Google said it would appeal the fine. “Android has created more choice for everyone, not less. A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition,” the company said according to Reuters.
This is not the first antitrust-related fine the EU has imposed on Google. In June 2017, European regulators fined Google $2.72 billion for promoting its shopping comparison service over others in its search engine results. And the company avoided another potential $5 billion fine in Feb. 2014, when it settled an EU antitrust investigation on whether it was abusing its market dominance by displaying its search results more prominently than others.