Jul 18, 2018

EU's Google penalties pack a punch

Photo: Michele Tantussi/Getty Images

The EU has imposed a record $5 billion fine on Google for its Android business practices — but the biggest impact is likely to come with new rules for how the company does business.

At issue: Historically, Google has required Android device makers that offer its Google Play app store to pre-install Google’s own applications. That’s the biggest of a variety of practices the EU says Google uses to maintain its dominance.

The penalty:

  • The $5 billion penalty (4.3 billion euros) is higher than the 2.4 billion euro fine that EU competition chief Margrethe Vestager hit Google with in a previous case about online comparison shopping.
  • Google now has 90 days to end its “illegal conduct.” But the company says it intends to appeal the decision.

Why it matters: Looking back to the Microsoft antitrust case 20 years ago, the fines were the least of the firm’s issues. More troublesome for Microsoft were specific conduct remedies the EU ordered, such as forcing Microsoft to allow PC buyers there to choose a rival browser.

  • But the biggest impact was the change in thinking that its antitrust ordeal forced upon Microsoft, which heavily weighed future business decisions based on how they might be viewed by regulators in both the U.S. and Europe.

Google CEO Sundar Pichai’s take: “The decision ignores the fact that Android phones compete with iOS phones…It also misses just how much choice Android provides” to phone makers, app developers and consumers.

Beyond Mountain View: Google has been hit hard in Europe. So far, however, both Facebook and Amazon have avoided this level of scrutiny, despite growing fears about their power.

What's next: We'll be watching whether this move widens the gap between Brussels and Washington, where antitrust enforcers have thus far been wary of taking on Big Tech. We’ll also watch how it plays out in the larger picture of EU-U.S. tensions provoked by the Trump administration’s trade moves and rhetoric.

Go deeper: Axios’ Sara Fischer has more on the EU’s move against Google.

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