European Commission Fined Google $5 Billion

The European Commission finedGoogle (NASDAQ: GOOGL) a record-high EUR 4.34 Billion (USD 5 Billion) for abusing its market dominance over the Android mobile operating system, the world’s most popular smartphone OS, earlier this week according to reports.

Google bundles its search engine and Chrome applications into Android phones by default to access the Google app store. The Company allegedly blocked phone makers from creating devices from running a forked version of the Android while making payments to large manufacturers and mobile network operators to exclusively bundle the Google search app.

The European antitrust regulators ordered Google to end its illegal practices within 90 days or face additional fines of up to 5% of its parent Company’s average daily global revenue. The EU fine is the largest ever issued by the EU antitrust regulators with their previous fine toward Google at USD 2.7 Billion in 2017 for manipulating search results to favor their shopping services over competitors, which Google is still appealing.

Other large tech companies, like Microsoft and Apple, have also faced anti-competition fines from the European Commission. Microsoft was fined twice by the EU for its failure to include a browser ballot in a Windows 7 update, and Apple was ordered to pay back USD 15.4 Billion in taxes to the European Union.

The EU referenced Apple, Google’s top competitor in the smartphone market space, noting that they did not “not sufficiently constrain” Google, which also pre-installs numerous apps on their iPhone products.

Google’s Chief Executive Officer, Sundar Pichai, posted a blog post with intent to appeal stating that the commission ignored “the fact that Android phones compete with iOS phones,” and that the decision did not take into account the choice Android provides to phone makers, mobile network operators, app developers and consumers. He argued that the app bundle makes it easy for users to install alternatives, and that the EU’s decision could affect its free business model with Android in the future.

The European Union continues to investigate a third antitrust case against Google and its search advertising service AdSense. Alphabet shares were down less than 1% Wednesday morning among the news of the fine.

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