Google Hit With Record $5 Billion Fine by European Union

EU says Google has illegally blocked competition by requiring devices to pre-install its Search and Chrome apps

Google was hit with a record €4.34 billion ($5 billion U.S.) fine by the European Union on Wednesday for violating antitrust laws.

The EU argued in its ruling that Google leveraged its Android operating system to illegally curtail competition, and pointed to specific three violations in its ruling:

– Google has “required manufacturers to pre-install” its Search app and Chrome browser as a condition for using Google’s app store

– Google has “made payments to certain large manufacturers and mobile network operators” to exclusively pre-install Google Search on their phones

– Google has stopped device makers from selling “even a single smart mobile device running on alternate versions of Android,” also known as “Android forks”

Google has used Android as a vehicle to cement the dominance of its search engine,” said EU antitrust commissioner Margrethe Vestager. “These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules.”

The $5 billion fine was more than twice the previous EU record, which was also levied against Google last year. Google made nearly $111 billion in revenue last year, and has $102.9 billion in cash reserves.

Google chief executive Sundar Pichai pushed against the EU’s decision in a blog post, saying Android has helped create more competition, not less. “Phone makers don’t have to include our services; and they’re also free to pre-install competing apps alongside ours,” said Pichai.

Pichai also hinted Google could move away from offering Android for free as a result of the fine.

“So far, the Android business model has meant that we haven’t had to charge phone makers for our technology, or depend on a tightly controlled distribution model,” said Pichai.

Vestager also called for Google to stop its practices within 90 days or face fines up to 5 percent of parent company Alphabet’s daily turnover. Pichai said Google will appeal the EU’s fine.