Google faced a record EU anti-trust fine of 4.3 billion euros on Wednesday over its Android smartphone system, in a ruling that risks a fresh clash between Brussels and Washington.
EU Competition Commissioner Margrethe Vestager is expected to say that the US tech giant abused Android’s dominant market position to boost usage of its own search engine and browser.
The new sanction would nearly double the previous record EU anti-trust fine of 2.4 billion euros, which also targeted Google, in that case for the Silicon Valley titan’s shopping comparison service in 2017.
The decision, which follows a three-year investigation, comes as fears of a transatlantic trade war mount due to President Donald Trump’s decision to impose tariffs on European steel and aluminium exports.
Vestager is set to announce the penalty against the US tech giant at a news conference in Brussels at 1100 GMT. A source close to the matter told AFP that the fine would be 4.3 billion euros (USD 5 billion).
Reacting to the ruling, Google CEO Sundar Pichai said the company will appeal against the Commission’s decision.
“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,” Pichai wrote in a blog post immediately after the verdict. The decision, according to the Google CEO, ignores the fact that Android phones compete with iOS phones.
“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,” Pichai wrote.
“The fine is based on the length of the infraction, but also on whether antitrust authorities believe there was an intention to commit the offence, and whether they excluded competitors or not,” said another European source.
Danish former minister Vestager, who has targeted a string of US tech titans, spoke by telephone with Google chief Sundar Pichai yesterday night to tell him about the decision in advance.
Vestager is expected to say that Google shut out rivals by forcing major phone makers including South Korea’s Samsung and China’s Huawei to pre-install its search engine and Google Chrome browser, thereby freezing out rivals.
They were also made to set Google Search as the default, as a condition of licensing some Google apps. Google Search and Chrome are as a result pre-installed on the “significant majority” of devices sold in the EU, the European Commission says.
An EU complaint formally lodged in April also accuses Google of preventing manufacturers from selling smartphones that run on rival operating systems based on the Android open source code.
Google also gave “financial incentives” to manufacturers and mobile network operators if they pre-installed Google Search on their devices, the commission said.
Under EU rules Google could have been fined up to 10 per cent of parent company Alphabet’s annual revenue, which hit USD 110.9 billion in 2017.
Vestager’s campaign against Silicon Valley giants in her four years as the 28-nation European Union’s competition commissioner has won praise in Europe but angered Washington.
Brussels has repeatedly targeted Google over the past decade amid concerns about the Silicon Valley giant’s dominance of internet search across Europe, where it commands about 90 per cent of the market.
As well as the Android and Google Shopping files, it also has a third investigation under way, into Google’s AdSense advert-placing business.
Vestager’s other major scalps include Amazon and Apple.
The EU ordered Apple in 2016 to pay Ireland 13 billion euros in back taxes that the iconic maker of iPhones and iPads had avoided by a tax deal with Dublin.
It has also taken on Facebook over privacy issues after it admitted that millions of users may have had their data hijacked by British consultancy firm Cambridge Analytica, which was working for Trump’s 2016 election campaign.
But Brussels has had US tech giants in its sights for a decade in a half, since it imposed a huge 497 million euro fine on Microsoft in 2004 for anti-competitive behaviour and ruled it must make changes to its Windows system.
The Google decision comes just one week before European Commission chief Jean-Claude Juncker is due to travel to the United States for crucial talks with Trump on the tariffs dispute and other issues.
Transatlantic tensions are also high over Trump’s berating NATO allies on defence spending at a summit last week, over his summit with Russian leader Vladimir Putin, and over the US president’s pull-out from the Iran nuclear agreement and Paris climate deal.
(With inputs from IANS)