Three years ago, Google received the highest ever competition fine from the European Commission: €4.34 billion. The company was found guilty of abuse of power through its Android mobile operating system. This week, the tech giant will have the opportunity to defend itself in European courts.
The fine is from 2018, but the violations are older: they took place between 2011 and 2014. A time when the smartphone revolution was still in full swing and Google wanted to conquer a place in that market. It is a large and complex case involving more than 100,000 documents.
When announcing the fine, European Commissioner Margrethe Vestager said that Google committed three violations to “ensure that search engine traffic on Android goes through Google Search”. As a result, according to Vestager, the company was not giving competitors a fair chance and consumers were unable to take advantage of more competition.
It concerns the following three violations:
Vestager pointed out in the decision on the fine that the search service is the most important source of income. According to her, Google saw that halfway through the previous decade it was not the PC, but the smartphone that would become increasingly important. The company anticipated this with Android, partly to “ensure that users would continue to use Google Search on their phones”.
Android has become the most important mobile operating system in Europe. According to market researcher Statcounter, it controls about 70 percent of the market. The rest have iOS. A duopoly has arisen with no movement whatsoever; market shares have been stable for some time.
Google disagree
The tech giant disagrees with the European Commission’s allegations. Google is expected to argue that it has made Android free for everyone. No one is obliged to install certain apps. The company will also argue that the pre-installation of apps, which it uses to generate revenue through searches, is necessary to maintain the services.
What may not help the company is that since the fine decision, an example has surfaced of how important installing the Google apps is. When Huawei was unable to use the Android license due to US sanctions, the share plummeted worldwide.
The Huawei Mate 30 Pro, presented at the end of 2019, was the first phone that lacked Google services:
Simply put: an Android phone without Google’s download store and apps is simply not interesting in the western phone market. Should this example come up during the hearing days, the company is expected to oppose this lecture. Nor does it see itself as a dominant player in the European search engine market (according to Statcounter the share is 93 percent in Europe).
This is not the only case between the European Commission and Google: in total, the tech company has already been fined more than 8 billion euros. A high amount, but one that it can pay without any problems. The profit of parent company Alphabet was 34 billion euros last year.
Exceptional case
Whether the arguments of the European Commission or Google hold up will have to become clear after this week. The whole working week has been set aside for the case. According to EU Court spokesman Stefaan van der Jeught, this is exceptional. That also means that it will probably be months before a ruling is made, possibly even in the fall of 2022.
After that, Google or the committee can still appeal to the Court. So before everything has crystallized, we can be a few years further. A ruling in the Google Shopping case is expected this fall.
Although the legal process is still ongoing, Google already adjusted a number of things a few months after the fine decision. It became possible for phone makers to install their own version of Android on phones and to continue to use the Android license. It became possible to license the Play Store separately (there were license costs) and finally there were separate licenses for the Search and Chrome app.
Earlier this year, after talks with Brussels, the option was added to choose a search engine yourself. A spokesperson for the committee speaks of “positive developments” in this regard, but it is also emphasized that the situation is “continuously monitored”.