Google fined Sh500bn for breach of European Union antitrust rules

A 3D printed Android mascot Bugdroid is seen in front of a Google logo in this illustration July 2018. /REUTERS

A 3D printed Android mascot Bugdroid is seen in front of a Google logo in this illustration July 2018. /REUTERS

As we reported yesterday, the European Commission has fined Google €4.34 billion for now following EU antitrust rules.

Margrethe Vestager, the European Commission's competition chief, said that Google's arrangements with phone manufacturers suppressed competition. More significantly, the European Union has also ordered Google to allow phone manufacturers and telecom operators to allow non-Google apps on Android devices.

"They have denied European consumers the benefits of effective competition in the important mobile sphere", she added.

The EC isn't done examining Google's business practices, saying that it "continues to investigate restrictions that Google has placed on the ability of certain third-party websites to display search advertisements from Google's competitors". If Google doesn't, it could pay an additional fine. It can no longer engage in the three violating activities.

During the investigation, device manufacturers told the commission that Google Play was a "must-have" app, which consumers expect to have preinstalled, especially since they can not lawfully install it themselves. It also prevented manufacturers from selling devices running on alternative versions of its Android operating system. The decision ignores the fact that Android phones compete with iOS phones, something that 89 percent of respondents to the Commission's own market survey confirmed.

Today, about 80% of smart mobile devices in Europe, and worldwide, run on Android. Other examples include Microsoft, which was fined multiple times in the mid 2000s for abusing its Windows-monopoly.

Lawmakers will need to ensure users can download from competing app stores and that smartphone makers are free to choose pre-installed apps.

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There is little doubt that Google has a monopoly in the market of Smartphone operating systems, as Android was pre-installed on 86 % of all Smartphones sold world-wide according to the market-research company Gartner. And while being dominant alone isn't illegal, abusing that power is.

Unsurprisingly, Google has disputed its punishment, claiming it to be "unjustified". Google issued a statement that it will be appeal the ruling, but it is unlikely that will lead to a change in decision. Google's licensing conditions make it impossible for manufacturers to pre-install some apps but not others. The EU didn't believe that argument held water.

Most of all, the European Union is anxious that this harms you, the consumer, by restricting your choice and preventing innovation that could lead to better alternative mobile experiences for you in the future.

The Commission's decision was delayed by a week by US President Donald Trump's visit to a North Atlantic Treaty Organisation summit in Brussels last week.

Google will have 90 days change its illegal practices, but it seems unlikely that the tech giant will comply so soon, so don't hold your breath. Worse yet, that 5 percent is on all the revenue of Google's parent Alphabet and not just the revenue it generates on Android.

The Commission focused on three specific Google trade practices, which it found to be illegal.

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