According to the news report by Bloomberg , Alphabet Inc.’s Google was fined a record €4.3 billion (~$5 billion) over antitrust issues from the European Commission. The division was also ordered to alter the manner in which it puts web browser as well as search apps on Andriod mobiles. This sum is much higher than any fines meted out by the US, China or other antitrust authorities.
Google was also given time till the middle of October to stop what the European Commission termed as “illegal practices”. Google has contracts with various handset makers to push their services in front of users. Currently, users are forced to install Google’s search app as well as Chrome web browser if they wish to access the Play Store, which is the company’s shop for third party apps.
The EC told the division of Alphabet that it would face a fine of 5% of its revenue per day if it did not comply with their orders.
According to the European Union’s Competition Commissioner Margrethe Vestager, Google has been using its Android platform to establish its search engine’s dominance in the market. The practices by the company have denied other competitors the chance to compete or even innovate on the merits of their products.
Google announced immediate after the judgement was passed that it was going to challenge the ruling of the EC. However, appealing this decision will not change the fact that Google will need to comply with the orders, unless the search giant can get the judges to allow for “interim measures” that would stop the Commission’s findings.
Google’s CEO Sundar Pichai stated that this decision by the EC rejected a business model that supported Android and create more – not less – choice for all users.
In its latest analysis of the fine, Bloomberg stated that even though the headlines make this number look bad, when put in context, it isn’t really that bad. This penalty is not as bad as the one that regulators had imposed on Microsoft Inc. about 9 years ago.
While €4.3 billion or $5 billion sounds like a huge amount, for Google, it isn’t much, since the company has more than $103 billion as cash reserves. Additionally, the other orders are not as bad as what Microsoft was forced to do.
Nine years ago, in 2009, courts ruled that the software giant had to present its users with a range of browsers, which they could choose from. The idea was to break the monopoly that Microsoft’s Internet Explorer had over the market at that time, and give other browsers such as Mozilla Inc.’s Firefox and (ironically) Google’s Chrome a chance to compete.
The challenge today with this case is that while Andriod may essentially be a Google product, but mobile device makers such as Samsung Electronics Co. Ltd. and Huawei Technologies Co. Ltd. have customized the product to their specific devices. And the European Commission cannot force these companies to offer choice screens since these mobile device makers are not a part of this case.
However, considering the fact that Samsung and Huawei, to name just a few of the mobile device makers, come up with their own web browsers (Samsung has already launched its own web browser) or offer other, better alternatives to their users, Google’s search engine and web browser will still dominate for the time being.
And while the decision meted out by the European Commission this week does make it a lot easier for the hardware manufacturers to look for other alternatives, it won’t be as easy as that. Which is why these penalties imposed on Google do not seem that harsh any more.