EU Fines Google $5 Billion for Restricting Competition

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Margrethe Vestager, E.U. Competition Commissioner

The European Union imposed a fine of $5 billion against Google on Wednesday for forcing smartphone makers to install their apps on Android-run devices. As the EU Competition Commissioner stated, this kept users from choosing which apps they wanted to use.

Google’s Actions and the Ruling

Google stipulated that phone makers who wanted to use the Google app store on their devices also had to install Google Search and the Chrome browser app. The company also paid phone makers to install Google Search as the only option on their devices.

Margrethe Vestager, the EU competition commissioner, said that both of these actions are against EU rules. She said that companies need to stand on their merits, not by restricting competition.

The $5 billion fine is the largest the commission has ever imposed on a single company. Vestager, however, said that the fine is not unreasonable considering Google’s resources and income. Alphabet, the company that owns Google, earned $31.15 billion in the first quarter of 2018.

Google was fined $2.8 billion last June for ranking its own shopping lists at the top of search results.

Critics of the Ruling

Al Verney, the spokesperson for Google, said that the company will appeal the decision. He argued that Android (owned by Google) creates competition against Apple smartphones. If consumers don’t want Google apps on their Android phones, they can buy Apple brand products.

Google also pointed out that it makes the majority of its money from Android phones on advertising revenue. When customers use Google Search, the company can display ads paid for by other companies in the search results. The company warned that if it can’t make as much money off of ad hosting, it might not license the Android operating system to phone makers for free. Google also said that it does allow makers to install other options, but most choose not to.

Some commentators question the timing of the EU’s ruling. They see it as backlash against an American company for Trump’s recent tariff increase on European aluminum and steel.

Aware of the context, Vestager said she, in fact, still likes the U.S. She then said that she is simply doing her job to ensure competition for consumers.