Google has been fined a record €4.3bn (US$5bn) by the European Commission over its Android mobile operating system.
The EC’s competition commissioner Margrethe Vestager said the tech giant, which is owned by Alphabet Inc (NASDAQ:GOOG), had used Android to illegally “cement its dominant position in general internet search”.
Fine of €4,34 bn to @Google for 3 types of illegal restrictions on the use of Android. In this way it has cemented the dominance of its search engine. Denying rivals a chance to innovate and compete on the merits. It’s illegal under EU antitrust rules. @Google now has to stop it
— Margrethe Vestager (@vestager) July 18, 2018
Alphabet has 90 days to change its practices or face further penalties of up to 5% of its average daily turnover.
The fine is the largest ever handed out to a single company by the EC, topping the €2.4bn penalty it slapped Google with last year over its online shopping service.
Still, Alphabet has more than enough cash to pay the bill – at the end of March, its financial statements showed it had more than US$100bn of cash reserves. It could also choose to appeal the ruling.
What happened?
Google had initially released Android, used in Samsung, Sony and Huawei phones among others, as open source and didn’t mind who used it or how.
But the EC found that that approach changed, claiming Google required phone and tablet makers to sets its search engine as the default and pre-install the Chrome browser before allowing them to offer access to its Play app store.
Regulators also alleged that the Silicon Valley firm stopped manufacturers from selling mobile devices powered by rival operating systems based on Android’s open source code.
The third specific allegation of anti-competitive behaviour was that Google gave device makers and mobile networks financial incentives to provide its own search service as the only pre-installed option.
In response, Google has denied forcing phone makers to pre-load any of its apps. It also argued that by distributing Google Search and the Play store together it had been able to offer its services for free.
Alphabet shares dipped 0.4% to US$1,198.80 in pre-market trading in New York.