Google Q&A: what is the fine for and can they afford it?

Google has been hit with a record fine and ordered to change the way in which it puts search and other apps on Android mobile devices

 EU Commissioner for Competition Margrethe Vestager, from Denmark, speaks at a news conference on the concurrence case with Google Android at the European commission in Brussels.

EU Commissioner for Competition Margrethe Vestager, from Denmark, speaks at a news conference on the concurrence case with Google Android at the European commission in Brussels.

 

Google has just received a record fine from the European Commission and been ordered to change the way in which it puts search and other apps on Android mobile devices. Here’s the background to the story:

What’s going on?

The European Commission on Wednesday fined the technology giant a whopping €4.34 billion for breaching EU antitrust rules.

Is that a lot?

It is the highest fine ever dished out by the commission and dwarves the €2.4 billion imposed by the commisison on Google last year for being found guilty of having used its search engine to build up its shopping service.

Can Google afford the fine?

The company’s parent Alphabet recorded revenues of $110 billion last year. It generates about the same amount of money as the fine every 16 days.

Is that the end to the fines?

Nope. The commission could fine Google additional penalties that are equivalent to a further 5 per cent of its turnover if it doesn’t put a stop to its anti-trust activitie within 90 days. The total fine could easily top €10 billion.

What did Google do ?

According to the commission, Google has over the last seven years imposed illegal restriction on mobile phone makers and network operators to cement its dominant position in search.

How did it do this exactly?

The company installed Google search as the default search engine on Android devices, preventing smartphone manufacturers from other search engines and by paying some phone makers and operators to pre-install Google Search.

Is that really so bad?

“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,” the commission has concluded.

What does Google say about the fine?

Google has denied any wrongdoing and is to appeal the fine (and is currently appealing the previous one dished out by the commission). It has previously said it doesn’t block users or manufacturers from installing other apps.

Alphabet chief executive Sundar Pichai had this to say about the commission’s ruling:

“The decision ignores the fact that Android phones compete with iOS phones, something that 89 per cent 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.”

Today’s decision rejects the business model that supports Android, which has created more choice for everyone, not less,” he added.

What do others say?

“Google has used Android as a vehicle to cement the dominance of its search engine. 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,” Margrethe Vestager, European Commissioner for Competition

“While Google claims that Android is open source, and that anybody can use it, their contractual practices show the opposite: a highly controlled ecosystem in which Google takes all at the expense of consumers and competition,” said Monique Goyens, director general of the European consumer organisation, BEUC.

How long did the investigation go on for?

The commission opened proceedings concerning Google’s conduct in April 2015

How many people use Android?

Android is the operating system used in more than 80 per cent of the world’s smartphones currently.