Will EU penalty make a difference in Google's smartphone dominance?


Google will probably challenge the fine, just as with did with the previous one.

In 2017, Vestager slapped the US -based tech giant with a $2.7 billion (4 billion NZD) fine for giving its shopping-comparison service prime real estate in search results over its rivals' competing offerings.

Competition commissioner Margrethe Vestager said this showed how "Google used Android as a vehicle to cement the dominance of its search engine".

She further went on to state how these restrictions have denied consumers the opportunity to benefit from a healthy competition between the tech giant and its rival, deeming any such practices illegal. That's because they prevented other mobile browsers from competing effectively with the pre-installed Google Chrome browser.

We've heard about the European Union competition commission chief's disapproval of Google's practices just last week and now, we are seeing the results.

In regards to the record-breaking fine, Vestager said "it's a very serious infringement". But the fine itself might not be Google's biggest concern.

Google started this practice in 2011, but began to slowly row back on it in 2013 after it became aware of the Commission's scrutiny. It can no longer engage in the three violating activities.

In particular, Google has required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google's app store (the Play Store). Google is accused of blocking rivals in online search advertising.

Today, about 80% of smart mobile devices in Europe, and worldwide, run on Android.

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Google makes money when manufacturers pre-load Google apps onto phones and consumers use those apps.

Unsurprisingly, Google has disputed its punishment, claiming it to be "unjustified". Google issued a statement that it will be appeal the ruling, but it is unlikely that will lead to a change in decision. "This harmed competition by significantly reducing their incentives to pre-install competing search apps".

The European Commission says the large fine is appropriate because of the "duration and gravity" of the antitrust violations. The EU didn't believe that argument held water.

Google has already been targeted over similar violations in Russian Federation, where it was forced to make it easier for consumers to use rival search engines.

The EC noted that dominance in the market is not an European Union antitrust violation; however, "dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets". Without that portal, owners of Android devices can't download games and other tools from third-party developers.

The Commission's decision was delayed by a week by US President Donald Trump's visit to a North Atlantic Treaty Organisation summit in Brussels last week.

Google was fined a record €4.3 billion ($5 billion/£3.8 billion) on Wednesday by the EU's competition watchdog for using its dominant position in the marketplace to quash competition.

The Commission has given Google 90 days it remedy what it deems to be illegal practices, or it could face penalty payments of up to 5% of the average daily revenue of its parent company, Alphabet.

Shares in Google's parent company Alphabet slid more than one percent in USA premarket trading.