Europe: billions in penalties against Google due to misuse by Android
Throughout Europe, approximately 80% of smartphones are equipped with the Google operating system, Android. In contrast to the iOS and Blackberry OS operating systems, which may not be used by third-party manufacturers, mobile devices of different manufacturers are operated with the Android system. Third-party manufacturers of mobile devices receive an Android license for this.
Due to the licensing conditions, the installation of the app store Google Play on a device was subject to the Google Search app and Google Chrome browser also being pre-installed on the device. Google also gave manufacturers of mobile devices and operators of mobile phone networks considerable financial incentives for ensuring that they pre-installed only Google Search on all Android devices of their product range and no other search engine. In addition, in order to be allowed to pre-install Google applications on their devices, manufacturers had to commit themselves not to develop or sell devices that are operated with alternative Android versions, which were not approved by Google ("Android Forks").
In its decision of 18/07/2018, the Commission established that Google has a market-dominating position with a share of over 90% on the market for general Internet search services, for operating systems subject to a licence fee for intelligent mobile devices and for Android app stores. Through the practices described above, in the Commission's view, Google was able to use Android to consolidate the market-dominating position of its search engine.
By linking the Play Store to the pre-installation of Google Search and Google Chrome, manufacturers were encouraged to pre-install rival search engine and browser apps on their devices. Consumers were thus given fewer incentives to download such apps. The Commission classified the payments from Google to manufacturers of mobile devices and mobile phone networks as illegal. The Commission rejected Google's objections that the payments had been necessary in order to convince manufacturers to create devices for the Android system. The manufacturers' obligation not to develop or distribute devices operated with Android Forks led to a reduction in the development and sale of such devices after the commission's decision. Accordingly, the behaviour of Google kept some manufacturers from developing and selling devices operated with the Android Fork "Fire OS" by Amazon.
For these violations, the Commission imposed a fine in the amount of EUR 4.34 billion and obligated Google to cease the illegal behaviour. In the case of non-compliance, Google would have to pay a penalty of up to 5% of the average global daily turnover of Alphabet, the parent company of Google. Victims of Google’s anti-competitive practices have the option of demanding compensation from Google before the courts of the member states.
Authors: Christina Hummer & Eva Niel