The European Commission hit Google with a $5.1 billion fine today, stating that the tech company broke EU antitrust laws by striking deals with Android phone manufacturers to favor Google's services over rival services (via The New York Times).
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Specifically, the European Commission pointed towards the Google search bar and Chrome web browser coming pre-installed on Android smartphones like those made by HTC, Huawei, and Samsung. With these options already in smartphones when users purchase them, other services are "unfairly boxed out."
“Google has used Android as a vehicle to cement the dominance of its search engine,” said Margrethe Vestager, Europe’s antitrust chief. “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 E.U. antitrust rules.”
Now, Google has 90 days to ends these practices or face penalties of up to 5 percent of the worldwide average daily revenues of parent company Alphabet. In response, Google's European Twitter account confirmed that the company will appeal the Commission's decision.
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.@Android provides choice. With Android, you have a choice of 24,000 devices, at every price point, from more than 1,300 different brands & with over 1 million apps available in the Google Play Store. #AndroidWorks More on our blog: https://t.co/dOXaQ6ZPT3 pic.twitter.com/kK8EHiAVqb — Google Europe (@googleeurope) July 18, 2018
According to Pichai, the EU fine "sends a troubling signal in favor of proprietary systems over open platforms." Pichai also notes that Android phones compete with iOS phones, a factor that isn't brought up in the ruling.
Today, the European Commission issued a competition decision against Android, and its business model. 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.
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.
The European Commission has targeted Google previously, fining the company $2.8 billion last year for unfairly favoring its own services in Google search results. For the new $5.1 billion fine, the EU is said to be taking advanced measures to "rein in the clout" of American tech companies, but Google is not expected to back down from its appeal decision and has begun to populate a hashtag on Twitter -- #AndroidWorks -- against the Commission's fine. According to The New York Times, the case is now "likely to drag on for years."
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Next thing you know Apple is getting in trouble for having the iTunes Store on their devices as the default.
* 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
The report acknowledges that Google allow third party browsers etc. to be installed but they force manufacturers to install and default to google apps by threatening to withhold access to the Play store and other services.
At least these fines are starting to sting. For ages it seemed like these fines were only a million or two here and there which Google can find in their couch cushions. It’s pretty funny that this is starting to backfire because the whole point of Android was to make Google money by becoming the biggest mobile OS by market share by giving it away free and having everyone on the platform use Google services.
Apple wins because of their handsome margins.
Every other android phone OEM gets squeezed in the middle with razor thin profits (if they are lucky).
Android is simply a means to an end. Nothing more.