The European Union has fined Google for a record $6.85 Billion
The European Union has fined Google for three different allegations. The record-breaking antitrust fine is for Google using its Android mobile operating system to eliminate competition. The previous record from 2017 was also levied by the EU on Google $3.7Billion for Google using their online search engine in a way that ignored rival offerings or offerings Google did not want you to see. A third EU case pending against Google involves Google’s AdSense product. Which the EU claims are being used by Google to prevent third parties from using its product by displaying search advertisements from Google’s competitors.
The Android case is the most important case out of the 3 antitrust cases against Google as Android runs more than 75 per cent of the world’s smartphones. The EU commission also ordered Google to halt anti-competitive practices in contractual deals with smartphone makers and telecoms providers within 90 days or face additional penalties of up to 5 per cent of parent Alphabet’s average daily worldwide turnover.
Google “Android has created more choice for everyone, not less. A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition,” it also said it would appeal the fine. The EU commissioner dismissed Google’s argument of competition from Apple, saying the iPhone maker was not a sufficient constraint because of its higher prices and switching costs for users.
Lobbying group FairSearch, whose 2013 complaint triggered the EU investigation, welcomed the ruling, saying it could help restore competition in mobile operating systems and apps. Polar Capital who have been holding Google stock since its IPO said “The reality is that as long as they’re delivering great utility to their consumers, consumers will still use those platforms. If they do, advertisers will be drawn to those platforms, too, because the ROIs are very difficult to replicate anywhere else,”. Polar Capital remains broadly neutral on Google share prices.
CCS Insight said The EU takedown of Google is six to eight years too late, with users paying the price “There is a significant danger of unintended consequences that penalise 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.” Major Android device makers, including Samsung Electronics Co, Sony Corp, Lenovo Group Ltd and TCL Corp, declined to comment.
The fine represents just over a fortnight’s worth of revenue for Google parent company Alphabet Inc. and would scarcely dent its war chest of almost $140 billion. But it could add to a brewing trade war between Brussels and Washington. Commission President Jean-Claude Juncker, is due to meet US President Donald Trump at the White House next Wednesday in an effort to avert threatened new tariffs on EU cars amid Mr Trump’s complaints about the US trade deficit.