21 Sep Tech News : Record €4 Billion Fine For Google Upheld
Google has been given the largest ever anti-trust fine of 4.125 billion euros from the EU, following an unsuccessful appeal.
What Was The Anti-Trust Issue?
The European Commission (EC) originally fined Google in 2018 for breaching its anti-trust laws by forcing Android phone-makers to install the Google search and web browser apps in order to access the Google Play Store. The EC said that Google had abused its dominant position by imposing anticompetitive contractual restrictions on manufacturers of mobile devices and on mobile network operators, in some cases since 1 January 2011 (the EC’s action against Google in relation to Android started on 15 April 2015).
The fine imposed at the time was €4.343 billion on Google, the largest fine ever imposed by a competition authority in Europe.
Following its unsuccessful appeal, Google said of the decision to uphold the original ruling (with a slightly reduced but still substantial fine) “We are disappointed that the Court did not annul the decision in full. Android has created more choice for everyone, not less, and supports thousands of successful businesses in Europe and around the world.”
Restrictions To Strengthen Google’s Dominant Position
In short, the EC fined Google for three types of restriction which it said were designed to “protect and strengthen Google’s dominant position in relation to general search services and, therefore, the revenue obtained by Google through search advertisements.” The EU’s General Court ruled that the common objective and the interdependence of the restrictions were the reason why it had classified them as single and continuous infringement of Article 102 TFEU and Article 54 of the Agreement on the European Economic Area (EEA).
The three types of antitrust restrictions that led to Google being fined were:
- Those contained in ‘distribution agreements’ requiring manufacturers of mobile devices to pre-install the general search (Google Search) and (Chrome) browser apps in order to be able to obtain a licence from Google to use its app store (Play Store);
- Those contained in ‘anti-fragmentation agreements’, under which the operating licences necessary for the pre-installation of the Google Search and Play Store apps could be obtained by mobile device manufacturers only if they undertook not to sell devices running versions of the Android operating system not approved by Google;
- Those contained in ‘revenue share agreements’, under which the grant of a share of Google’s advertising revenue to the manufacturers of mobile devices and the mobile network operators depended on them not pre-installing a competing general search service on devices.
Google appealed against the decision, but the EU’s General Court largely confirmed the EC’s decision to fine Google. However, it decided to reduce the fine from €4.343 billion to €4.125 billion due to “its reasoning differing in certain respects from that of the Commission”.
Other Antitrust Cases
This is not the only antitrust lawsuit that Google has faced or is facing currently. For example:
– In July last year, an antitrust lawsuit by 37 US states over allegations relating to how it may be abusing its position of power in relation to Android app distribution and competition. This related to Google allegedly using its market monopoly power as the main Android app distributor through its Play Store to charge 30 percent fees for in-app purchases (the same as Apple, Amazon, and Microsoft XBox) from developers.
– In November last year, the EU’s General Court upheld a €2.42 billion penalty imposed on Google (and its parent company Alphabet) dating back to 2017 for competition abuses relating to Google’s product comparison search service ‘Google Shopping’.
What Does This Mean For Your Business?
Google has now suffered some painful defeats over some of its competitive practices, and this latest defeat does not bode well for Google or other big tech companies with the Digital Markets Act (DMA) competition rules due to come into force next year. There appears to be general agreement among many commentators that the European Commission got it right with this latest decision because allowing phone manufacturers to open their devices to competition in search and other services could benefit consumers by giving them greater choice. The ruling may also help smaller competitors by allowing them to inter-operate with the dominant company’s services, promote their offers, and make contracts with their customers beyond the gatekeeper’s platform. This latest ruling could also be unwelcome news for Apple in terms of strengthening the EU’s antitrust watchdog in its investigations of Apple’s practices in the music streaming market, which the regulator says Apple currently dominates.