Google is facing the threat of a fine of $7.4 billion


The European Commission (EC) has written to Google and its “parent” Corporation Alphabet official charged with abuse of a dominant position on the market of mobile operating systems (OS), said the EC. “Notice of claims” (Statement of objections) EC in the Google address was a continuation of a three-year antitrust proceedings against the company and second violation of American European Corporation laws, reminded at a press conference the European Commissioner for competition policy, Margrethe Vestager.

“Default” against the competition

The EC acknowledged that Google demanded that mobile phone manufacturers preinstall on gadgets with the Android OS, which is owned by the American company, Google search and “default” to make it dominate even in the presence of alternative services. The investigation revealed that the company thus used the dependence of the manufacturers of Android devices from the Google app store — Play Store — and “tied” the option to preset your search. As a result of competing search engines had not had the opportunity to become the “default” to “significant majority” of the devices sold in the European economic area, said the EC. This deprived the manufacturers of the incentive to preset search application competitors, and consumers to download such apps.

In a similar way Google acted in the case of the preset browser Chrome. “Browsers are an important “entry point” to search queries on mobile devices”, — reads the statement of the EC. And therefore, limiting manufacturers ability to preset the browsers of competitors, Google has violated the competition at the same time and in the market of mobile browsers, and search market.

Google also forbidden to produce smartphones that worked on alternative versions of Android: since Android OS is open source, any developer can create on its basis own version of the mobile OS, the message of the EC. However, if the manufacturer wants to preinstall Google services, he is obliged to sign the so called agreement against fragmentation, which prohibit the use of alternative OS. This ban directly affected the consumers described in the EC: users have no access to devices with other versions of the software.

In addition, the Commission found that Google provided benefits manufacturers and mobile operators, if those agreed to preinstall Google search on the device on an exclusive basis, i.e. if the service was the only search engine on your smartphone. In the end, the EC concluded that Google deliberately limited competitors in the mobile OS market to strengthen the leadership in the segment of search engines. The company’s actions hindered the development of other players and discriminate against consumers and developers, is acknowledged by the Commission. “Google stood in the way of innovation competitors that violates the antitrust laws. The rules are the same for all companies operating in Europe”, — concluded the European Commissioner Vestager.

Sanctions of $7.4 billion

The EC announced the formal commencement of an investigation against Google in April 2015. Together with the preliminary stages of the proceedings runs from 2013. Among “witnesses” of the case was held including Yandex, which in Russia itself appealed to the Federal Antimonopoly service (FAS) to investigate antitrust practices of American companies in the Russian market of mobile OS. In September 2015, the Federal Antimonopoly service acknowledged that Google violated the law on protection of competition, however, the U.S. company appealed the decision in court.

The European decision in respect of Google “Yandex” welcome: EK, apparently, indicates the same actions by Google that have been the subject of consideration by the FAS, said the press-Secretary of “Yandex” Asya Melkumova. “We are convinced that the absence of restrictions on the promotion of applications and services on mobile and other platforms will facilitate transparent competition applications and services for the benefit of all users,” she said.

In April 2016 the EC also recognized the Google guilty of antitrust violations in the European market of Internet advertising on the collective complaint of Microsoft, Tripadvisor, Expedia and Streetmap. They insisted that Google gives preference to its own services in search results and thereby causes financial damage to competitors.

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Google denies these allegations. Disagree in a Corporation and claims relating to the imposition of services to manufacturers of Android devices. “Our agreement [with mobile devices] are completely voluntary,” said Google General counsel Kent Walker in response to accusations from the EC. He added that the Corporation looks forward to working with the EC to “demonstrate how carefully we designed the model of Android that it serves for the benefit of users and competition.”

The EC filed charges does not mean immediate sanctions for Google — a company has 12 weeks to respond to the claims. Potential size of fines for violation of competition (as for violations on the advertising market) — up to 10% of the global revenue of the company, Reuters notes. The decision of the EC on antitrust violation can cost the Corporation in the amount of up to $7.4 billion in addition, the company may be required to change business practices in the provision of services of the mobile OS. Even if the EC decided to fine Google a percentage of revenues from Android, the fine could exceed $1 billion: Google’s revenue from advertising sales through apps running on Android, in 2015 reached $11 billion, the Agency estimated.