Europe hits Google with a record $5 billion fine

Joanna Estrada
July 18, 2018

"Google must now bring the conduct effectively to an end within 90 days or face penalty payments of up to 5% of the average daily worldwide turnover of Alphabet, Google's parent company", the European Union stated.

The source said Competition Commissioner Margrethe Vestager would confirm the antitrust fine, which is almost double the previous record 2.4 billion Euro fine which the US tech company received a year ago over its online shopping search service.

Vestager said that "companies must compete on their merits", playing by antitrust rules that favor consumers and open markets, and not restrict competition.

It should be noted that European Union has another investigation into Google's business.

Google said Android had created choice and not hindered it. "A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition", it said.

The fine represents just over two weeks of revenue for Google parent Alphabet Inc. and will barely dent its cash reserves of $102.9 billion (£79bn). It could soon be followed by more fines from a probe into online advertising contracts.

The European Commission fine exceeds last year's then-record 2.4 billion-euro penalty following an investigation into Google's shopping-search service. Google makes around $30 billion in revenue per quarter right now and its parent company, Alphabet, turned over more than $100 billion previous year.

Alphabet shares were down 0.5% in pre-market trading in NY on Wednesday. The agreements stipulate that certain Google apps and search tools, as well as the Google Play Store must be pre-installed on Android devices, which allows Google to preserve and strengthen its dominance in search.

"The EU must ensure complete compliance from a recalcitrant Google and the United States must take action to provide American consumers with similar protections", added Mr Lowe.

More significant than a blockbuster fine could be an accompanying order freeing up phone manufacturers to choose non-Google apps to install on Android phones.

With the company able to make its ads show up in more smartphone apps than any other tech rival, Google's app network has quietly become a huge growth engine. In this way it has cemented the dominance of its search engine. The EU said Google stopped doing this in 2014.

Google also gave "financial incentives" to manufacturers and mobile network operators if they pre-installed Google Search on their devices, the commission said.

"Android means manufacturers don't have to buy or build expensive mobile operating systems".

Danish former minister Vestager, who has targeted a string of USA tech titans, spoke by telephone with Google chief Sundar Pichai on Tuesday night to tell him about the decision in advance. "Today's decision and fine are a logical outcome, as this is a clear anticompetitive behavior to me".

Google has continually contested it has done anything wrong.

The company's high payouts to app developers, coupled with its entrenched relationship with millions of advertisers, has turned Google into the main revenue source for many apps.

Other reports by Click Lancashire

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