US President Donald Trump has blasted the EU for ‘slapping a $5billion fine on one of our great companies, Google’ – days after describing the bloc as a ‘foe’.
Trump wrote ‘I told you so!’ as he hit out at the European Union in a tweet after the internet giant was handed a record-breaking fine for breaching competition laws.
It comes days after he called the EU a ‘foe’ and singled out ‘what they do to us in trade’ as he prepared to head to Helsinki for his summit with Russian President Vladimir Putin.
US President Donald Trump has blasted the EU for ‘slapping a $5billion fine on one of our great companies, Google’ – days after describing the bloc as a ‘foe’
In his latest criticism of the bloc, he wrote: ‘I told you so! The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google. They truly have taken advantage of the U.S., but not for long!’
This morning, Google Chief executive Sundar Pichai hit back at EU regulators over the huge fine, accusing the EU of trying to destroy the company’s business model as he announced the firm’s decision to appeal the ruling.
Trump wrote ‘I told you so!’ as he hit out at the European Union in a tweet after the internet giant was handed a record-breaking fine for breaching competition laws
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
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.
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.
Why was Google fined?
Google has been hit with a record-breaking $5billion fine for breaching EU competition laws.
Competition commissioner Margrethe Vestager found the company used illegal practices to establish market dominance for its Android operating system, search engine and Chrome web browser on smartphones.
She found that the company did this in three ways:
1) Google provides Android to phone manufacturers for free, but if they want to install its most popular apps – including the ‘must-have’ Play Store, where users shop for additional apps – then they have to pre-install Google search and the Chrome web browser on the phone.
While users are free to download alternative software after activating the phone, evidence gathered by the EU suggests that most stick with whatever is already on their device.
2) Google was also caught offering financial incentives to manufacturers which only installed Google search and the Chrome browser on their devices, meaning this was the only choice presented to users when they turned the device on for the first time.
Again, users were able to seek out alternative software if they chose, but evidence suggests most didn’t.
3) Google banned manufacturers selling devices based on its version of Android from marketing devices using different variations of the software.
The EU says this hurt rival companies and in particular Amazon, whose Fire operating system is based on Android.
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.
WHAT ANTITRUST CASES HAS GOOGLE FACED IN EUROPE?
July, 18 2018 – EU antitrust regulators hand down a $5 billion (£3.8bn / €4.3bn) fine to Google after a three-year long investigation.
June 27, 2017 – EU fines Google $2.84 billion (£2.1bn / €2.42bn) for thwarting rivals of shopping comparison websites.
July 14, 2016 – EU sets out another charge against Google’s shopping service. It also accuses the company of preventing third parties using its Adsense product from displaying search advertisements from Google’s competitors – a third case against the company.
April 20, 2016 – EU sends a charge sheet to Google outlining the company’s anti-competitive practices with regard to Android smartphone makers and apps makers.
April 15, 2015 – EU charges Google with blocking competitors of its shopping service.
Sept 2014 – Joaquin Almunia says he will not be able to wrap up the Google case before his mandate ends in October.
May 2014 – Joaquin Almunia, European Competition Commissioner at that time, says feedback from complainants will be crucial to determining whether he accepts Google’s concessions.
Feb 5, 2014 – Google improves its concessions related to online search.
2013 – Lobbying group FairSearch files a complaint about Google’s Android business practices to the European Commission.
April 25, 2013 – EU seeks feedback from rivals and users to Google’s concessions.
April 3, 2013 – Google offers concessions related to online search and its AdSense advertising network to address EU competition concerns, without admitting wrongdoing.
Nov 30, 2010 – European Commission opens investigation into allegations that Google has abused its dominant position in online searches following 18 complaints.
Nov 3, 2009 – British price comparison site Foundem complains about Google’s online search to the European Commission.
‘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
EU ‘WILL RETALIATE’ IF US IMPOSES SANCTIONS
The EU said it will try to defuse a transatlantic trade row next week in Washington but is drawing up a list of imports to target if the US imposes tariffs on cars.
European Union Trade Commissioner Cecilia Malmstrom said the EU would ‘think out of the box’ in a bid to find a solution but her warning also fuelled fears of an escalating global trade war with the Washington at the centre.
‘We are preparing a list of rebalancing measures,’ Malmstrom told a conference in Brussels, as US President Donald Trump’s administration studies imposing duties on cars following its tariffs on aluminium and steel.
‘Similar moves on cars would be disastrous,’ the Swedish commissioner said before a high-level EU mission to Washington next Wednesday.
Malmstrom will accompany European Commission chief Jean-Claude Juncker who will try to persuade Trump at talks in the White House to drop tariffs on metals and avoid duties on cars.
‘Tariff measures on cars are neither wanted or warranted,’ Malmstrom said.
‘They are at best a solution in search of a problem. At worst they are an illegal move to gain leverage in trade negotiations.’
Malmstrom said Brussels has informed US officials about its efforts to prepare a new list of targeted US products, which an EU source said would be worth just under 10 billion euros ($11.5 billion).
The list would be more painful than the 2.8 billion euros worth of products – like peanut butter, blue jeans, Harley Davidson motorcycles – that the EU targeted in retaliation for US metal tariffs.
Trump imposed duties of 25 percent on steel imports and 10 percent on aluminium in March, but had given temporary exemptions to the EU and some other close trading partners as talks continued.
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.
WHY WAS GOOGLE SLAPPED WITH A RECORD £2.1BN EU FINE IN 2017?
Google was slapped with a record fine in June 2017 of $2.84 (£2.1bn / €2.42bn) by Europe’s competition watchdog after breaching antitrust rules with its online shopping service.
The European Commission gave the internet search firm 90 days to stop the practice or face a penalty of up to five per cent of the average daily turnover of the firm’s parent company, Alphabet.
The penalty came after the competition referee launched an investigation into Google Shopping eight years ago.
This was amid complaints it gave the service a prominent position on the internet search engine, while rival services were demoted.
In a statement at the time of the verdict, commissioner Margrethe Vestager said: ‘Google has come up with many innovative products and services that have made a difference to our lives.
‘That’s a good thing. But Google’s strategy for its comparison shopping service wasn’t just about attracting customers by making its product better than those of its rivals.’
‘Instead, Google abused its market dominance as a search engine by promoting its own comparison shopping service in its search results, and demoting those of competitors.’