Google has hit back at EU regulators after the company was slapped with a record-breaking $5billion fine for breaching competition laws.
Chief executive Sundar Pichai accused the EU of trying to destroy the company’s business model as he announced the firm’s decision to appeal the ruling.
Mr Pichai argued that Google’s Android operating system had ‘created more choice for everyone, not less’ by providing a credible challenge to Apple.
It comes after Margrethe Vestager, the EU’s commissioner for competition, found Google had used illegal business practices to establish market dominance.
Sundar Pichai, CEO of Google (left), has accused EU competition commissioner Margrethe Vestager of attempting to destroy the company’s business model after it was hit by fines
Google was slapped with a record $5billion fine after the EU found it broke competition laws to establish dominance for the Android operating system, Google search and Google Chrome web browser on smartphones
Ms Vestager announced the fine on Wednesday after a three-year investigation into Google’s business.
While dominance itself is not a problem, Ms Vestager said, market-leading companies have a ‘special responsibility’ to ensure rivals can compete ‘on merit’.
She ruled that Google violated that responsibility by strong-arming manufacturers into installing its software on phones and choking-off competition.
Android, Google search and Chrome are used on about 80 per cent of smartphones.
Speaking at the hearing, Ms Vestager said: ‘Google has engaged in illegal practices to cement its position.
‘It must put an effective end to this practice or face penalty payments.
‘Google must comply with EU rules for dominant companies. Google has breached these rules since 2011.’
The firm must now comply within 90 days or face additional hefty fines that will levied for each day it fails to meet the guidelines.
Shares in the search giant fell by 0.4 percent in premarket trade in the US on news of the fine, according to reports in CNN.
The EU takedown of Google is six to eight years too late, with users paying the price, said Geoff Blaber of CCS Insight.
‘Any action by the EU is akin to shutting the stable door after the horse has bolted,’ he said.
‘There is a significant danger of unintended consequences that penalises the consumer. This ranges from increased fragmentation and greater app inconsistency to increases in hardware cost should Google decide to change or adapt the Android business model.’
Lobbying group FairSearch, whose 2013 complaint triggered the EU investigation, welcomed the ruling.
The fine focuses on Google using its influence as the dominant firm in the marketplace to maximise revenue by suppressing traffic to any rivals.
Vestager said Google had 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.
Google also prevented manufacturers from selling smartphones that run on rival operating systems based on the Android open source code, it said.
The company finally gave ‘financial incentives’ to manufacturers and mobile network operators if they pre-installed Google Search on their devices, the commission said.
Google provides Android free to smartphone manufacturers and generates most of its revenue from selling advertisements that appear along with search results.
Commissioner Vestager explained in the press conference: ‘Our case focuses on three types of restrictions that Google imposed on mobile device manufacturers and mobile operators to ensure traffic goes to google search.
‘Google has required manufacturers to pre install google search app on the android operating system.
‘Manufacturers had to do this if they wanted to be able to sell devices with the google play store.
‘Second, Google paid to ensure that only the Google search app was preinstalled on such devices
‘Thirdly, Google has obstructed the development of competing operating systems that could have provided a platform for rivals.’
The latest fine comes more than a year after the European Commission issued a landmark $2.8bn (£2.1 billion / €2.4bn) penalty on Google for favouring its own shopping service over competitors.
That takes the total expenditure from the search firm on EU imposed fines to $6.7 billion (£5.1 bn / €5.7bn) since 2017.
The EU penalty is likely to exceed the 2017 fine because of the broader scope of the Android case, experts claim.
That total expenditure for the search firm on EU imposed fines has now risen to $6.7 billion (£5.1 billion) since 2017. The EU penalty is likely to exceed the 2017 fine because of the broader scope of the Android case, experts claim
The EU antitrust enforcer has charged Google with using its dominant Android to marginalise rivals following a three-year-long investigation – seen as the most important of three EU cases against the world’s most popular internet search engine.
The Mountain View-based 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.
Google’s own Play Store, which is used to distribute television shows, movies, applications, and ebooks, accounts for more than 90 per cent of all software downloaded on Android devices in Europe.
Its popularity in turn could mean an uphill battle for EU antitrust regulators seeking to level the playing field for Google’s rivals.
Lawmakers will need to ensure users can download from competing app stores and that smartphone makers are free to choose pre-installed apps.
EU regulators say Google has tilted the field in its favour by forcing phone makers to pre-install Google Search together with its Play Store and Chrome browser.