The case underscores the broader challenge regulators face in overseeing the digital economy. By the time the authorities home in on an area deserving of scrutiny, the market may have moved on. “Fast-moving markets are where competition law is most important,” said Jonathan Kanter, a partner at the law firm Paul Weiss and a former antitrust investigator for the Federal Trade Commission, who has worked for Google competitors including Yelp. But “when you have cases that are many years old, you’re fighting old battles instead of the next one.” At the heart of the European Commission’s case was the question of whether Google had abused its power by forcing handset makers like Samsung, Huawei and HTC to make its Google Search and Chrome browser the default services on Android-based devices in order to gain access to other Google apps. While Google gives Android away to handset makers, those companies must effectively pre-install 11 Google apps on their devices, giving Google’s products far greater reach and more users to click on its ads. The strategy has enabled Google to reach more than a billion monthly users for six products: search, maps, Gmail, YouTube, the Chrome internet browser, and the Google Play app and media store. Now the European authorities are ordering Google to stop tying Google Search and Chrome to the Google Play store. In addition, antitrust officials said Google must stop providing financial incentives to handset makers and wireless carriers to favor its services, a practice the company stopped in 2014. In another remedy, European officials ordered that Google must allow handset manufacturers to create their own versions of Android software, otherwise known as “forks.” Google had previously discouraged the rise of competing smartphone software based on Android by blocking manufacturers’ access to Google apps if they built devices using any alternative versions. The case has parallels to a similarly significant action against Microsoft in the 2000s, when it was heavily penalized in Europe and the United States for using its power in the personal computer market to bundle in its own internet browser, boxing out its rivals. At the time, Google, a young upstart, was among those to complain about Microsoft’s practices.<doc-sep>Google hit with €4.3bn Android fine from EU Published 18 July 2018 image copyright Getty Images/Google Google has been fined a record €4.34bn ($5bn; £3.9bn) over Android. The European Commission said the firm had used the mobile operating system to illegally "cement its dominant position" in search. The firm's parent Alphabet has been given 90 days to change its business practices or face further penalties of up to 5% of its average global daily turnover. It has said it plans to appeal. However, it could easily afford the fine if required - its cash reserves totalled nearly $103bn at the end of March. media caption WATCH: Margrethe Vestager says the record-sized fine is a result of Google's illegal behaviour At a press conference in Brussels, Competition Commissioner Margrethe Vestager said consumers needed choice. And she suggested the ruling could lead manufacturers to sell smart devices using different versions of the Android operating system to Google's, such as Amazon's Fire OS, which she said they had been prevented from doing. "This will change the market place," she said. Google's chief executive Sundar Pichai has blogged in response. "Rapid innovation, wide choice, and falling prices are classic hallmarks of robust competition and Android has enabled all of them," he wrote. "Today's decision rejects the business model that supports Android, which has created more choice for everyone, not less." image copyright Google image caption Sundar Pichai also released a video clip saying the ruling could "upset the careful balance of the Android ecosystem" Ms Vestager previously fined Google €2.4bn ($2.8bn; £2.1bn) over a separate probe into its shopping comparison service - a ruling the tech firm is in the process of appealing against. In addition, her team has a third investigation underway into Google's advert-placing business AdSense. What is the case against Google? Ms Vestager alleges that there are three ways that Google has acted illegally: it required Android handset and tablet manufacturers to pre-install the Google Search app and its own web browser Chrome as a condition for allowing them to offer access to its Play app store it made payments to large manufacturers and mobile network operators that agreed to exclusively pre-install the Google Search app on their devices it prevented manufacturers from selling any smart devices powered by alternative "forked" versions of Android by threatening to refuse them permission to pre-install its apps Ms Vestager acknowledged that Google's version of Android does not prevent device owners downloading alternative web browsers or using other search engines. image copyright Getty Images image caption Google is accused of forcing manufactures to pre-install Chrome by refusing to license its Play Store alone But she said that only 1% of users downloaded a competing search app, and 10% a different browser. "Once you have it, it is working, very few are curious enough to look for another search app or browser," she said. What does the regulator want Google to do now? The Competition Commissioner said that Google carried out its abuse at a time when the mobile internet was growing quickly, helping it ensure that its advertising-supported search service repeated the success it had already found on desktop computers. She cannot turn the clock back, but said the size of the fine had been based on the firm's search-related earnings from Android devices in Europe since 2011. She has, however, said the firm must now stop all of the practices outlined above and refrain from any measures with a similar goal. Russia may give one example of how this could be achieved. After similar complaints by the country's regulator, Google now offers Android users a choice between Google, Yandex and Mail.ru as the default search engine the first time they use the Chrome browser. image copyright Yandex image caption Yandex has seen gained market share on Android phones since Google changed its behaviour in Russia Yandex in particular has benefited from this. Since the change in June 2017, the Moscow-based firm has seen its share of mobile search rise from about 34% to 46%, according to Statcounter. What has the reaction been? The European Commission first began scrutinising Android in April 2015, after a complaint by Fairsearch - a trade group that originally included Microsoft, Nokia and Oracle among its members. It claims the case has dragged on for so long because Google had used "every trick in its book to delay action". But the group welcomed the commissioner's intervention. "This is an important step in disciplining Google's abusive behaviour in relation to Android", said spokesman Thomas Vinje. "It means that Google should cease its anti-competitive practices regarding smartphones, but also in other areas - smart TVs in particular - where it is foreclosing competition by using the same practices." A trade body representing mobile operators has also greeted the development. "This will enable consumers to benefit from a greater choice of mobile services, and allow more players to innovate and offer new services in the market," said the GSMA's chief regulatory officer John Giusti. How has the EU punished others? The European Commission had the power to fine Google up to 10% of its annual revenue. Based on its last annual report, that would have amounted to a maximum of $11.1bn (£8.5bn). The €4.3bn figure is, however, a record-sized sum for the commission. Earlier punishments include: fines totalling €3.8bn against several truck-makers accused of price collusion, which were imposed in July 2016 and September 2017 the €2.24bn fine against Google for promoting its own shopping comparison service at the top of its search results, which was announced in June 2017 two fines totalling €1.46bn against Microsoft related to the bundling of its Explorer browser with Windows, and failing to keep a pledge to provide users with a choice of other browsers. The two penalties were announced in February 2008 and March 2013 a €1.35bn collective fine against several car glass producers, which had been accused of illegally sharing commercially sensitive information. This was made in November 2008 a €1.06bn fine against Intel, which was accused of offering discounts to computer-makers that avoided rivals' computer chips. It was announced in May 2009<doc-sep>“It’s a very serious infringement. It’s a very serious illegal behavior,” Margrethe Vestager, the European commissioner for competition, said in a press conference announcing the decision. But a big question remains: What does the decision mean for Google and other big tech companies? This might be the tip of the iceberg for global technology regulation, for which Europe has been doing the work the United States can’t, or won’t, pursue. Five billion dollars is a lot of money, even for Google. Alphabet, Google’s parent company, brought in revenue of almost $111 billion in 2017, of which about $32 billion, or 29 percent, came from its Google division. Alphabet’s profit totaled $12.6 billion for the year, making $5 billion amount to 40 percent of its annual net revenue. Still, the amount is a drop in the bucket when compared to Alphabet’s overall financial picture. While the company also took a $9.9 billion one-time charge related to changes in U.S. tax law, Google’s success is only growing—its net revenues climbed by 20 percent over 2016, and almost that much over the year prior. And like other big tech companies, Google is sitting on huge piles of cash: about $102 billion, of which $62.8 billion is foreign held. That makes the possible $8 billion from the two antitrust fines—Google appealed the first decision, and indicated its intention to appeal the new one, too—more of an inconvenience than an existential crisis. Alphabet’s shares traded only slightly lower following the announcement of the EU fine, suggesting that investors weren’t terribly concerned about the matter, at least for now. But there are longer-term uncertainties. One is how the decision will affect Google’s business, and what effects that impact might have on the technology industry and the people who use its services. The European Commission’s action would require Google to stop making handset manufacturers bundle its apps and services, and to allow them to sell devices that run on other versions of Android. Given that Alphabet’s revenue still consists primarily of income from Google’s ad businesses, and given that mobile is the the dominant platform for internet users around the world, the loss of those default installations could have an impact on the company’s future success. Even so, the change would only affect new installs, so all the current Android devices—more than 2 billion of them—would continue running as is, with Google’s services in a preferential position. If some of those users move to new devices, they might not switch off Google services. But the possibility of a variety of new Android platforms could loosen Google’s grip on the mobile market. Google’s CEO, Sundar Pichai, responded to the European Commission’s decision in a blog post titled, “Android has created more choice, not less,” suggesting that he might be most concerned about the erosion of the mobile operating system’s majority. Pichai argued that Android has allowed a diversity of mobile handsets at varying costs and features, but with the common ability to run the same Android software. Of course, this is exactly the matter that the European Commission wants to let flourish even more than Google has made possible. The very homogeneity that Pichai underscored as a consumer benefit has also benefitted Google substantially.<doc-sep>President Donald Trump on Thursday used a recent fine against Google to fuel his complaints about the European Union. In a tweet, he seemed to suggest that this penalty was yet another sign of the EU’s abuse of the US — an argument he’s increasingly stressed in recent days as he makes the case for imposing potential auto tariffs on the longtime American ally. “I told you so! The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google,” Trump wrote. “They truly have taken advantage of the U.S., but not for long!” I told you so! The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google. They truly have taken advantage of the U.S., but not for long! — Donald J. Trump (@realDonaldTrump) July 19, 2018 The “Five Billion Dollar fine” Trump is referring to is a record penalty the EU levied against Google for antitrust violations this week. On Wednesday, the EU concluded a multiyear investigation and announced that it would punish Google for trying to bundle its own apps with its Android operating system. Basically, the EU argues that Google forced phone makers to preinstall its Search and Browser apps onto Android phones, giving its products an unfair advantage over those of competitors. It’s the second multibillion-dollar antitrust-related fine the EU has hit Google with this year. Trump’s attack comes as the US continues to navigate a strained relationship with the EU, one of several allies that the president has become more combative with in the past month. In early July, he called the EU “as bad as China” when it comes to trade practices, and more recently, he’s threatened impose sweeping auto tariffs as “retribution.” Trump’s antagonism toward the US ally, which he’s gone so far as to call a “foe,” has puzzled observers, especially after he’s skirted direct confrontations with Russia on the issue of election interference. “In a trade sense, they’ve really taken advantage of us, and many of those countries are in NATO and they weren’t paying their bills,” Trump said in a CBS News interview lambasting the EU. The Google fine is only the latest ammunition Trump is using to argue that the EU has treated the US unfairly. Trump isn’t the first to suggest that the EU has “taken advantage” of the US Tech companies have long been at the center of a back-and-forth between the US and the EU, and Trump isn’t the first to suggest that they aren’t getting an even-handed shake. Then- President Barack Obama had previously accused the EU of launching protectionist probes that took aim at American tech companies. “We have owned the internet. Our companies have created it, expanded it, perfected it in ways that they can’t compete,” Obama told Recode in 2015. “And oftentimes what is portrayed as high-minded positions on issues sometimes is just designed to carve out some of their commercial interests.” In the past five years, the EU has targeted a number of US tech giants including Amazon, Apple, and Google with antitrust and tax-related penalties. This past March, a Wall Street Journal editorial addressed some of the longstanding tension between the two global powers and a few of the forces that are driving it: “The U.S. Treasury has complained for years about European tax discrimination against American tech companies, especially since Europe is laying claim to taxes from profits to which Treasury thinks it’s also entitled.” The EU, meanwhile, has argued that US tech companies have abused tax loopholes. It has also long been a more aggressive enforcer of antitrust policies. (Antitrust scrutiny on tech companies has grown in the US as well in the wake of Facebook’s Cambridge Analytica data privacy scandal and rising concerns that these giants have become too big too quickly.) When Obama levied his critiques in 2015, the EU maintained that it treats all companies equally. “This point — that regulations are only there to shelter our companies — is out of line,” a European Commission spokesperson told the Financial Times. “It is in [US companies’] interest that things are enforced in a uniform manner.” Trump doesn’t seem to be buying this argument.<doc-sep>
European Union regulators have slapped Alphabet-owned Google with a record 4.34 billion euro ($5 billion) antitrust fine for abusing the dominance of its Android mobile operating system, which is by far the most popular smartphone OS in the world. Google said in a statement that it would appeal the ruling, arguing against the EU's view that its software is restrictive of fair competition. European officials say Google's parent company has unfairly favored its own services by forcing smartphone makers to pre-install Google apps Chrome and Search in a bundle with its app store, Play. It also said Google violated competition rules by paying phone makers to exclusively pre-install Google search on their devices and preventing them from selling phones that run other modified, or "forked," versions of Android. The European Commission, the EU's executive body, ordered the company to put an end to illegal conduct within 90 days, or else face additional charges of up to 5 percent of Alphabet's average daily worldwide revenue. The EU fine is the largest ever issued to Google, which last year was served with a $2.7 billion penalty for favoring its shopping service over competitors. In its decision, the EU pointed to Apple, Google's fiercest competitor in the smartphone market, saying the smartphone maker did "not sufficiently constrain" Google. Apple also pre-installs a number of apps on its iPhone models. The ruling was issued to protect European consumers, EU Commissioner for competition Margrethe Vestager told CNBC. “They have products that we all like and like to use,” she said. “The only thing we don’t like is when they get to misuse their success and put in place illegal restrictions.” Following the fine, "the thing that Google has to do now is, of course, to stop,” Vestager said. In a blog post, Google's CEO, Sundar Pichai, wrote that the commission ignored "the fact that Android phones compete with iOS phones," adding that the decision did not consider the choice Android offers to phone makers, mobile network operators, app developers and consumers. He also defended the company's app bundling, arguing it's easy for users to install alternatives if they don't want to use Google's pre-installed options. The EU decision, he said, could "upset the careful balance" Google has with Android. The company lets phone makers use the open source software for free, but generates advertising revenue when consumers use its apps. Google's advertising business is growing much faster on mobile than desktop, and by bundling its apps together, Google has more real estate to sells its ads as well as more data about users for targeting those ads. Tweet Alphabet shares were down less than 1 percent midmorning Wednesday amid news of the fine, which could have been as high as $11 billion, or 10 percent of Alphabet's annual global revenue, according to EU regulation guidelines. The EU first opened its investigation into Android in 2015, two years after receiving a complaint from FairSearch, which, at the time, included the likes of Microsoft and Nokia.