Google Hit With Historic $6.8bn EU Antitrust Fine
Google has been hit with a record €4.34bn ($6.83bn) fine for breaching the European Union’s antitrust rules where the search engine giant has ‘engaged in illegal practices’ to cement its dominant market position through its search engine.
Google has been given 90 days to end this conduct or it will face additional penalty payments, 5 per cent of the average daily worldwide turnover of Alphabet for each day of non-compliance.
This fine is around 40 per cent of Google’s net profit for 2017 which was US$12.62bn, according to The Wall Street Journal.
Every year, Google generates more than US$95bn from adverts, such as those shown to and clicked on by users of Google Search. The majority of this revenue is from its smartphone and tablets.
The EU says Google has put restrictions on smartphone manufacturers and network operators to ensure traffic goes through its search engine. Including Google requiring manufacturers to pre-install the Google search and browser apps on devices running Android and paying those manufacturers to make sure only Google was on those devices.
The EU also notes Google has been using Android ‘as a vehicle to cement the dominance of its search engine’ and has denied its rivals (Mozilla Firefox) the chance to innovate and compete on the merits.
Sundar Pichai, CEO at Google has responded to the EU fine saying 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.
He says, “It also misses just how much choice Android provides to thousands of phone makers and mobile network operators who build and sell Android devices; to millions of app developers around the world who have built their businesses with Android; and billions of consumers who can now afford and use cutting-edge Android smartphones.”
Google has been asked by the EU to stop controlling which search and browser apps manufacturers can pre-install on Android devices, or which Android operating system they can adopt.
This has been the biggest fine handed to a company from any US, Chinese or other antitrust agency. Commentators say this historic fine could hinder the company’s grip on the mobile phone market.