The U.S President has attacked the European Union’s decision to fine Google AU$6.85 billion for illegal practices regarding its Android mobile operating system, which powers 80 per cent of mobile devices worldwide. Google’s CEO also hit back at the decision saying the ruling ignores the choice Android had created for consumers.
In the same week the American President labeled the EU a “foe” amid tensions over a possible trade war between the long time allies, the U.S head of state took to twitter to lambast the European regulator.
“I told you so! The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google,” the President tweeted.
“They truly have taken advantage of the U.S., but not for long!”
The European Commission handed down the fine alleging Google had engaged in anti-competitive behaviour by imposing contractual restrictions on smartphone manufacturers and mobile network operators using the Android platform to ensure it maintained its search engine dominance.
By requiring manufacturers to preinstall Google apps, Google is stifling competition and driving phone users to its main source of revenue – its search engine, according to the regulator.
“Google has used Android as a vehicle to cement the dominance of its search engine,” said European Commissioner for Competition Margrethe Vestager, who led the investigation into the American tech giant.
“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.”
According to the European Commission Google has breached antitrust rules in three significant ways.
Firstly by requiring manufacturers to pre-install the Google search app and Google browser as a condition for licensing Google’s app store. Secondly the Commission claims Google paid certain large manufacturers and mobile networks operators to exclusively pre-install the Google search app. And, finally, Google has “has prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google (so-called ‘Android forks’)”.
It is the second major fine for Google from the EU regulator in the last 13 months. In June last year Google was fined AU$3.57 billion for abusing its market dominance in search by giving an unfair advantage to its own comparison shopping service.
Google now has 90 days to bring the conduct effectively to an end or face penalty payments of up to 5 per cent of the average daily worldwide turnover of Alphabet, Google’s parent company.
In a statement the commission noted Google’s dominance of the licensable smart mobile operating system market through its Android platform. And while market dominance is not illegal as such under EU antitrust rules, the Commission said “dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets”.
In response to the decision Google has argued the open source Android platform creates choice for customers and preinstalled apps are necessary for the Android ecosystem to survive.
“The free distribution of the Android platform, and of Google’s suite of applications, is not only efficient for phone makers and operators—it’s of huge benefit for developers and consumers,” a Google spokesperson said.
“If phone makers and mobile network operators couldn’t include our apps on their wide range of devices, it would upset the balance of the Android ecosystem. So far, the Android business model has meant that we haven’t had to charge phone makers for our technology, or depend on a tightly controlled distribution model.”
Google’s response also said the European Commission had failed to account for the company’s ongoing competition with Apple’s iOS and had ignored the “new breadth of choice and clear evidence about how people use their phones today”.
Not like Apple
Android is a licensable smart mobile operating system. This means third party manufacturers of smartphones and tablets like LG and Samsung can license and run Android on their devices.
Unlike Apple’s iOS being exclusive to iPhones, the Android operating systems is not restricted to certain devices or manufacturers, although Google now manufactures its own smartphone hardware with its Pixel range of phones.
“As a licensable operating system, Android is different from operating systems exclusively used by vertically integrated developers (like Apple iOS or Blackberry),” the statement form the Commission said.
“Those are not part of the same market because they are not available for licence by third party device manufacturers.”
Through Android, Google dominates the licensable smart mobile operating systems, taking a 95 per cent market share, according to the European commission which found Google had leveraged that position to ensure apps were preinstalled on Android devices and variations of the Android platform were not created, thereby breaching EU antitrust rules.