Google faces $5 billion fine over Android

Google faces $5 billion fine over Android

European regulators came down hard on another United States tech giant overnight fining Google a record US$5 billion (NZ$7.3 billion) for forcing cellphone makers that use the company's Android operating system to install Google search and browser apps.

The fine accounts for around 40% of Google's 2017 net profit of $12.62 billion.

EU competition chief Margrethe Vestager will hold a news conference later today, the European Commission said.

During the investigation, device manufacturers told the Commission that the Google Play Store is a "must-have" app, which consumers expect to have pre-installed, especially since they can not lawfully install it themselves.

The commission claimed Google ran afoul of antitrust laws by paying large manufacturers and mobile network operators to exclusively pre-install the Google Search app on Android devices. These practices have denied rivals a chance to innovate and to compete on the merits. "This is illegal under European Union antitrust rules", said Commissioner Margrethe Vestager. If mobile device makers use Android but turn their backs on Google services, Android might stop being as much of a cash cow for the company.

The EU's decision to impose the record fine on the US-firm comes at a time of heightened tensions between Brussels and Washington. The EU previously fined Google €2.42 billion ($2.72 billion) for abusing its dominant market position for tweaking search results to favor its Google Shopping service to the detriment of its direct competitors.

Google has said it will appeal the commission's decision, saying: "Android has created more choice for everyone, not less".

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Google is the dominant force in mobile operating systems in Europe and overseas.

According to the European Union, forcing manufacturers to pre-install apps like Search meant Google could protect its core search business from competition. The EC decision concluded that Google has engaged in two instances of illegal tying: the the tying of the Google Search app, which ensured that its Google Search app is pre-installed on practically all Android devices sold in Europe, and the tying of the Google Chrome browser, which also ensured that its mobile browser is pre-installed on almost all Android devices sold in the Europe.

"Worst case scenario, Google spends a million dollars fighting [the fine]", Patterson said.

The Commission has been investigating Google's use of Android since 2015 after European and American rivals complained.

The company also limited the ability of manufacturers to sell phones running alternative versions of Android.

For example, all Android phones with the Play Store are required by Google to also include apps like Chrome and Google Search. The ecosystem carries all the properties needed for a fair competition - "rapid innovation and lower prices". They've stated that Android has given customers more freedom, not less. Vestager acknowledged that nothing was preventing users from moving to providers, however research showed just 10 percent of users installed a different browser and just 1 percent downloaded a competing search app. And if Google doesn't change its business practices, the cost could grow even higher, with penalty payments added after 90 days. Also true. What he doesn't address is how not agreeing (and thereby missing out on the Google payout and losing the right to install the Play Store) might affect that manufacturer's business.

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