Google hit with $5B antitrust fine over Android search restrictions

Posted:
in General Discussion edited July 2018
The European Commission has fined Google 4.34 billion euro ($5 billion) for breaking antitrust rules, claiming the restrictions the tech giant imposes on carriers and smartphone producers using the Android operating system helps the search engine maintain its vast market share.




The regulator claims Google has gone against antitrust rules in a number of ways, including requiring smartphone vendors to pre-install the Google Search and Chrome apps on their devices, as a condition for accessing the Google Play Store. The EC also states Google made payments to major device producers and mobile network operators if they exclusively pre-installed the Google Search app on their devices.

Google is also accused of preventing mobile device manufacturers from being able to produce products running on a forked version of Android, else they will be prevented from pre-installing Google's apps.

The Commission started to look into the matter in April 2015, following a complaint by trade group Fairsearch, made up of firms including Microsoft, Nokia, and Oracle.

The European Commission has ordered Google to end this conduct in Europe within 90 days, or face further penalty payments of up to 5 percent of the average daily worldwide turnover of parent company Alphabet. The initial $5 billion fine is said to "take account of the duration and gravity of the infringement," which the Commission believes has been running since 2011.

"Google has used Android as a vehicle to cement the dominance of its search engine," said Competition Commissioner Margrethe Vestager. "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 EU antitrust rules."

Google has advised it will be appealing the Commission's decision.

"Android has created more choice for everyone, not less," a Google spokesperson said in response to the ruling. "A vibrant ecosystem, rapid innovation, and lower prices are classic hallmarks of robust competition."

Rapid innovation, wide choice, and falling prices are classic hallmarks of robust competition. Android has enabled this and created more choice for everyone, not less. This is why we intend to appeal today's Android decision https://t.co/TnpMZlDV8j

— Sundar Pichai (@sundarpichai)


This is not the only fine the European Commission has imposed on Google for its search-related activities. In June 2017, it completed an investigation into how Google promotes its own products in search results while demoting those of its competitors, issuing a fine of $2.72 billion.
spheric
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Comments

  • Reply 1 of 55
    gatorguygatorguy Posts: 20,898member
    Android users have always had the option of choosing alternate search providers and search engines.  
    https://smartphones.gadgethacks.com/how-to/google-chrome-101-change-default-search-engine-your-iphone-android-phone-0184285/

    Personally I think the the EU is overstepping on this one but I'm certainly not claiming to understand the finer points of the EU's methodology of determining it to be an antitrust violation. No surprise tho as a fine has been signaled for months now.

    With that out of the way I think the horses are already out of the barn so I don't see the EU's action making much if any difference at this point.  Google Search and Chrome are widely preferred by EU users on the desktop where it's always up to the seller to decide what gets pre-installed, not Google forcing it going on. I would think that serves as evidence that the same preferences would exist on mobile even if there were no automatic default.

     Also not sure why Oracle felt they suffered any negative impact from Google services preinstalled either. Microsoft I get. 

    Still $5B is a hefty fine, grabbing much or most of Google's Play Store profits for this year if it stands. I still don't get how the EU can claim rights to worldwide revenues for an EU specific violation (and Google being a separate subsidiary of overall Alphabet operations in the first place) but as I said in another thread there's obviously legal support for it. 
    edited July 2018 racerhomie3jbdragonolsjony0
  • Reply 2 of 55
    Not too dissimilar to Microsoft and Internet Explorer many years ago - you'd think a company the size of Google (or Alphabet now?) would realise and have worked to avoid it. Then again, they maybe took the Samsung route of going ahead anyway - make a sh*t tonne of money over the years in the hope that any fine would be miniscule in comparison, which it is.
  • Reply 3 of 55
    gatorguygatorguy Posts: 20,898member
    adm1 said:
    Not too dissimilar to Microsoft and Internet Explorer many years ago - you'd think a company the size of Google (or Alphabet now?) would realise and have worked to avoid it. Then again, they maybe took the Samsung route of going ahead anyway - make a sh*t tonne of money over the years in the hope that any fine would be miniscule in comparison, which it is.
    While it may seem on the surface (pun) appear that Google's issue with Android and the EU today is nearly identical to Microsoft's Explorer problem back in the day and therefore they were dumb to do the same thing it is not. 
    https://www.ft.com/content/f1d7b3fc-06dd-11e6-a70d-4e39ac32c284
    edited July 2018
  • Reply 4 of 55
    brakkenbrakken Posts: 682member
    FU Goog! The birds have come home to roost. At least the EU still has rule of law...
    Along with Oracle’s suit, maybe Goog will finally write its own OS and start competing, rather then steal, betray and bully...
    HAHAHA Google be evil.
    patchythepiratewatto_cobra
  • Reply 5 of 55
    lkrupplkrupp Posts: 7,162member
    gatorguy said:
    Android users have always had the option of choosing alternate search providers and search engines.  
    https://smartphones.gadgethacks.com/how-to/google-chrome-101-change-default-search-engine-your-iphone-android-phone-0184285/

    Personally I think the the EU is overstepping on this one but I'm certainly not claiming to understand the finer points of the EU's methodology of determining it to be an antitrust violation. No surprise tho as a fine has been signaled for months now.

    With that out of the way I think the horses are already out of the barn so I don't see the EU's action making much if any difference at this point.  Google Search and Chrome are widely preferred by EU users on the desktop where it's always up to the seller to decide what gets pre-installed, not Google forcing it going on. I would think that serves as evidence that the same preferences would exist on mobile even if there were no automatic default.

     Also not sure why Oracle felt they suffered any negative impact from Google services preinstalled either. Microsoft I get. 

    Still $5B is a hefty fine, grabbing much or most of Google's Play Store profits for this year if it stands. I still don't get how the EU can claim rights to worldwide revenues for an EU specific violation (and Google being a separate subsidiary of overall Alphabet operations in the first place) but as I said in another thread there's obviously legal support for it. 
    What a beautiful Google apology from its chief apologist. 
    stanthemanericthehalfbeemacxpressStrangeDayswatto_cobra
  • Reply 6 of 55
    lkrupplkrupp Posts: 7,162member
    Hey, that’s a better deal than the $15 billion Apple will have to cough up eventually. Pay it, Google, and count your blessings. 
    cornchipwatto_cobra
  • Reply 7 of 55
    FolioFolio Posts: 592member
    FWIW excerpt from earlier BAML report on Google, says ruling might be a small help to Apple's Safari, but...: "Bloomberg is reporting that Google CEO Sundar Pichai was to have a conference call with EUCC Margrethe Vestager on Tuesday (July 17), which suggests a ruling on the Android case may be imminent. Key issues in the Android case include: 1) Google Search and Chrome pre- install requirements; 2) anti-fragmentation requirements on Android; and 3) Google Search exclusivity incentives. Based on the shopping precedent (€2.4bn fine), we think a sizable fine is possible (Google has $98bn cash), but we believe any required business practice changes and impact to Google App traction will likely be more impactful to the stock. We don’t think search is at risk; Google apps established Key questions we have on the pending ruling: 1) impact to Google search; 2) impact on Google app (YouTube, Gmail, Maps) users and usage; and 3) disruption to Android ecosystem. We think risk to search is limited, as there isn’t a good alternative in Europe, and device makers (and users) will likely favor Google search. Bing and Apple’s Siri may have a small opening to buy some share, but we think Google’s results advantage is even bigger in Europe. Google already offers manufacturers financial incentives for pre- installing search and monetizes much better than competitors, limiting the need for even higher TAC (traffic acquisition cost), and users would likely push back on an alternative. De-bundling Chrome (and potentially other Google apps) from Android phones may create challenges for the Google app ecosystem, which could mean higher TAC, but we think YouTube, Gmail, Maps and other services will continue to see strong consumer demand. Chrome usage may have more risk given viable alternatives that could be installed, but we wonder if Google could make a similar case on Safari being the default on iPhones. We are less concerned about Android fragmentation as we see little incentive for device makers to push Android forks that don’t work as well with Android apps in the app store. Regulatory risk largely priced in; maintain Buy At 22x 2019E P/E (ex-other bets losses and cash), we believe the stock is discounting an ongoing regulatory headwind. While the stock could see a modest impact from a large Android fine (e.g., a $5bn fine would represent just $7/share of market cap and a 1x impact to 3Q EPS), we don’t think the Street will discount it as a material ongoing headwind to Alphabet’s earnings potential."
    watto_cobrarepressthis
  • Reply 8 of 55
    chrispoechrispoe Posts: 79member
    EU financial crisis is still going on..LOL
    jbdragoncornchip
  • Reply 9 of 55
    FolioFolio Posts: 592member
    Ooops. Analyst said Apple's Siri, not Safari. My mistake. [Sorry for the formatting, spaces all ran together]
  • Reply 10 of 55
    dewmedewme Posts: 2,123member
    Oh my, the European Commission flogging Google with a feather. Too brutal to watch.  :'(
    GG1cornchipwatto_cobrawillcropoint
  • Reply 11 of 55
    gatorguy said:
    adm1 said:
    Not too dissimilar to Microsoft and Internet Explorer many years ago - you'd think a company the size of Google (or Alphabet now?) would realise and have worked to avoid it. Then again, they maybe took the Samsung route of going ahead anyway - make a sh*t tonne of money over the years in the hope that any fine would be miniscule in comparison, which it is.
    While it may seem on the surface (pun) appear that Google's issue with Android and the EU today is nearly identical to Microsoft's Explorer problem back in the day and therefore they were dumb to do the same thing it is not. 
    https://www.ft.com/content/f1d7b3fc-06dd-11e6-a70d-4e39ac32c284
    your link is behind a paywall, I'm keen to be schooled if I'm mistaken in my understanding of the similarities. From what I can find on the interwebs, Google has already taken action in Russia where it faced a similar anti-competitive charge and as a result now offers users the choice of several search engines and browsers on first launch - exactly like Microsoft now does when we launch IE for the first time. The site noted that taking similar action would be an adequate work-around in the EU. The problem was never that other software WAS available but rather the agreements linking exclusive use of google's services with the android licence.
  • Reply 12 of 55
    sphericspheric Posts: 1,779member
    lkrupp said:
    Hey, that’s a better deal than the $15 billion Apple will have to cough up eventually. Pay it, Google, and count your blessings. 
    Entirely different matter. 

    This is a fine. 

    Apple’s 15 billion to Ireland are back taxes. 

    One may disagree with either ruling, but it’s the difference between being grounded and staying indoors to catch up with homework you didn’t think you had. 
    muthuk_vanalingamavon b7
  • Reply 13 of 55
    racerhomie3racerhomie3 Posts: 1,148member
     I personally think that  The European Union has corn nuts.
    cornchip
  • Reply 14 of 55
    gatorguygatorguy Posts: 20,898member
    lkrupp said:
    gatorguy said:
    Android users have always had the option of choosing alternate search providers and search engines.  
    https://smartphones.gadgethacks.com/how-to/google-chrome-101-change-default-search-engine-your-iphone-android-phone-0184285/

    Personally I think the the EU is overstepping on this one but I'm certainly not claiming to understand the finer points of the EU's methodology of determining it to be an antitrust violation. No surprise tho as a fine has been signaled for months now.

    With that out of the way I think the horses are already out of the barn so I don't see the EU's action making much if any difference at this point.  Google Search and Chrome are widely preferred by EU users on the desktop where it's always up to the seller to decide what gets pre-installed, not Google forcing it going on. I would think that serves as evidence that the same preferences would exist on mobile even if there were no automatic default.

     Also not sure why Oracle felt they suffered any negative impact from Google services preinstalled either. Microsoft I get. 

    Still $5B is a hefty fine, grabbing much or most of Google's Play Store profits for this year if it stands. I still don't get how the EU can claim rights to worldwide revenues for an EU specific violation (and Google being a separate subsidiary of overall Alphabet operations in the first place) but as I said in another thread there's obviously legal support for it. 
    What a beautiful Google apology from its chief apologist. 
    I thought you yourself were one of those a few days ago who questioned the EU's rights to fine companies based on worldwide revenues. Was I mistaken? I'm not particularly driven to go search for myself.

    EDIT: Just a quick look back and it was @radarthekat ; who questioned it's legality, with @thrang ; and @ericthehalfbee ; also saying it just wasn't right even if it might be legal. No idea then what your opinion is.
    edited July 2018
  • Reply 15 of 55
    revenantrevenant Posts: 518member
    lkrupp said:
    gatorguy said:
    Android users have always had the option of choosing alternate search providers and search engines.  
    https://smartphones.gadgethacks.com/how-to/google-chrome-101-change-default-search-engine-your-iphone-android-phone-0184285/

    Personally I think the the EU is overstepping on this one but I'm certainly not claiming to understand the finer points of the EU's methodology of determining it to be an antitrust violation. No surprise tho as a fine has been signaled for months now.

    With that out of the way I think the horses are already out of the barn so I don't see the EU's action making much if any difference at this point.  Google Search and Chrome are widely preferred by EU users on the desktop where it's always up to the seller to decide what gets pre-installed, not Google forcing it going on. I would think that serves as evidence that the same preferences would exist on mobile even if there were no automatic default.

     Also not sure why Oracle felt they suffered any negative impact from Google services preinstalled either. Microsoft I get. 

    Still $5B is a hefty fine, grabbing much or most of Google's Play Store profits for this year if it stands. I still don't get how the EU can claim rights to worldwide revenues for an EU specific violation (and Google being a separate subsidiary of overall Alphabet operations in the first place) but as I said in another thread there's obviously legal support for it. 
    What a beautiful Google apology from its chief apologist. 
    heaven forbid someone brings a little context to this place. 
    gatorguycornchipsphericsingularity
  • Reply 16 of 55
    Google could install their apps on their own phones all they want, it's when they require others to do the same (or lose access) that they get in trouble.
    Apple can not be found to do similar things as they only pre-install on their own devices and can't force other competing companies into installing Apples' wares.

    radarthekatwatto_cobra
  • Reply 17 of 55
    MacProMacPro Posts: 18,352member
    lkrupp said:
    gatorguy said:
    Android users have always had the option of choosing alternate search providers and search engines.  
    https://smartphones.gadgethacks.com/how-to/google-chrome-101-change-default-search-engine-your-iphone-android-phone-0184285/

    Personally I think the the EU is overstepping on this one but I'm certainly not claiming to understand the finer points of the EU's methodology of determining it to be an antitrust violation. No surprise tho as a fine has been signaled for months now.

    With that out of the way I think the horses are already out of the barn so I don't see the EU's action making much if any difference at this point.  Google Search and Chrome are widely preferred by EU users on the desktop where it's always up to the seller to decide what gets pre-installed, not Google forcing it going on. I would think that serves as evidence that the same preferences would exist on mobile even if there were no automatic default.

     Also not sure why Oracle felt they suffered any negative impact from Google services preinstalled either. Microsoft I get. 

    Still $5B is a hefty fine, grabbing much or most of Google's Play Store profits for this year if it stands. I still don't get how the EU can claim rights to worldwide revenues for an EU specific violation (and Google being a separate subsidiary of overall Alphabet operations in the first place) but as I said in another thread there's obviously legal support for it. 
    What a beautiful Google apology from its chief apologist. 
    I wonder this Google entity writes on other blogs (Apple or Android) and if so other name or different ones, I'd love to know.  
    watto_cobra
  • Reply 18 of 55
    revenantrevenant Posts: 518member
    lkrupp said:
    Hey, that’s a better deal than the $15 billion Apple will have to cough up eventually. Pay it, Google, and count your blessings. 
    another beautifully silly statement from chief apologist.
     these two have nothing to do with one another. seriously apples and oragnes.
    MplsP
  • Reply 19 of 55
    chrispoechrispoe Posts: 79member
    EU consumers will be the ones getting screwed by this, not Google.

    Google has already said if the EU continues pushing this, they'll make the manufactures pay for licensing Google's app store. Those licensing fees will then be passed onto EU consumers.
    gatorguywatto_cobra
  • Reply 20 of 55
    tmaytmay Posts: 3,833member
    adm1 said:
    gatorguy said:
    adm1 said:
    Not too dissimilar to Microsoft and Internet Explorer many years ago - you'd think a company the size of Google (or Alphabet now?) would realise and have worked to avoid it. Then again, they maybe took the Samsung route of going ahead anyway - make a sh*t tonne of money over the years in the hope that any fine would be miniscule in comparison, which it is.
    While it may seem on the surface (pun) appear that Google's issue with Android and the EU today is nearly identical to Microsoft's Explorer problem back in the day and therefore they were dumb to do the same thing it is not. 
    https://www.ft.com/content/f1d7b3fc-06dd-11e6-a70d-4e39ac32c284
    your link is behind a paywall, I'm keen to be schooled if I'm mistaken in my understanding of the similarities. From what I can find on the interwebs, Google has already taken action in Russia where it faced a similar anti-competitive charge and as a result now offers users the choice of several search engines and browsers on first launch - exactly like Microsoft now does when we launch IE for the first time. The site noted that taking similar action would be an adequate work-around in the EU. The problem was never that other software WAS available but rather the agreements linking exclusive use of google's services with the android licence.
    “We are concerned that today’s decision will upset the careful balance that we have struck with Android, and that it sends a troubling signal in favor of proprietary systems over open platforms,“Google CEO Sundar Pichai said in a blog." 

    Android OS isn't really an open platform with those licensing term, and even then, Android OS is obviously controlled by Google. 
    chabigwatto_cobra
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