19 July 2018

Google to appeal record $5.1 billion antitrust fine, but may face US probe

Margrethe Vestager checking her smartphone?

Tech giant's CEO says EU ignored the competitive landscape and facts, but EU also has ear of the US regulator.

Google is to appeal the ruling by European antitrust regulators that fines the tech giant a record 4.34 billion euro ($5.1 billion), and orders it to stop using its popular Android mobile operating system to block rivals.

Ignoring evidence

According to Google CEO Sundar Pichai, the decision ‘ignores the fact that Android phones compete with iOS phones, something that 89 percent of respondents to the Commission’s own market survey confirmed. It also misses just how much choice Android provides to thousands of phone makers and mobile network operators who build and sell Android devices; to millions of app developers around the world who have built their businesses with Android; and billions of consumers who can now afford and use cutting-edge Android smartphones.’ The penalty nearly doubles the previous record last year of 2.4 billion euros, which Google was ordered to pay after its online shopping search service was deemed to be unfair to competitors. The EU dated Google’s illegal behavior back to 2011. EU antitrust chief Margrethe Vestager said, ‘Google has used Android as a vehicle to cement the dominance of its search engine.’ Ms Vestager dismissed Google’s argument that it had competition from Apple, saying iPhones were not a sufficient check on Google’s dominance because they cost more and require users to exert significant effort to adopt.

US probe?

The New York Times reports that at a congressional hearing on Wednesday, the chairman of the Federal Trade Commission, Joseph Simons, said that the mobile-software market was concentrated and that he spoke with Ms. Vestager on Tuesday. Mr Simons said, ‘let me just say we’re going to read what the EU put out very closely. We’re very interested in what they’re doing.’ Mr Pichai warned that Android may not remain free as a result of the EU ruling or it may shift to a tightly controlled distribution model like rival Apple Inc. He wrote in a blog that the decision ‘sends a troubling signal in favor of proprietary systems over open platforms.’ Google has 90 days to either halt such anti-competitive practices with smartphone makers and telecoms providers or seek a delay of the order while it appeals. Parent company Alphabet risks additional penalties of up to 5 percent of average daily global revenue for non-compliance. A third EU case against Google, not yet concluded, involves its AdSense advertising service which is accused of blocking users from displaying search advertisements from competitors, which Google denies.