July 18, 2018

Google said it would appeal the fine.

On Wednesday, EU regulators hit Google with a record 4.34 billion euros ($5 billion) antitrust fine for using its Android mobile operating system to squeeze out the rivals.

This penalty is nearly double the previous record of 2.4 billion euros which the US tech company was ordered to pay last year over its online shopping search service.

It represents just over 2 weeks of revenue for Google parent Alphabet Inc. & would scarcely dent its cash reserves of $102.9 billion.

But it could add to a brewing trade war between Brussels & Washington.

“Android has created more choice for everyone, not less. A vibrant ecosystem, rapid innovation & lower prices are classic hallmarks of robust competition,” it said.

EU Antitrust Chief Margrethe Vestager’s boss, Commission President Jean-Claude Juncker, is due to meet US President Trump at the White House next Wednesday in an effort to avert threatened new tariffs on EU cars amid Trump’s complaints over US trade deficit.

Vestager also ordered Google to stop its anti-competitive practices in contractual deals with smartphone makers & telecoms providers within 90 days, or face additional penalties of up to 5% of parent Alphabet’s average daily worldwide turnover.

“Google has used Android as a vehicle to cement dominance of its search engine. These practices have denied rivals the chance to innovate & compete on the merits. They've denied European consumers the benefits of effective competition in the important mobile sphere,” Vestager said.

The EU enforcer dismissed Google’s argument of competition from Apple, saying the iPhone maker wasn't a sufficient constraint because of its higher prices & switching costs for users.

Android, which runs about 80% of the world’s smartphones, as per market research firm Strategy Analytics, is the most important case out of a trio of antitrust cases against Google.

Some major Android device makers, including Samsung Electronics Co, Sony Corp, Lenovo Group Ltd & TCL Corp, declined to comment on the EU case.

“The reality is that as long as they (tech giants like Google & Facebook) are delivering great utility to their consumers, consumers will still use those platforms. If they do, advertisers will be drawn to those platforms, too, because the ROIs (return on investment) are very difficult to replicate anywhere else,” Polar Capital fund manager Ben Rogoff, who has been holding the stock since its initial public offering said.

Lobbying group FairSearch, whose 2013 complaint triggered the EU investigation, welcomed the ruling.

Google’s AdSense product also caught up in litigation

A third EU case, which has not yet concluded, involves Google’s AdSense product. Competition authorities have said Google prevented 3rd parties using its product from displaying search advertisements from Google’s competitors.

Vestager has also ordered a series of measures against other US companies over tax practices in some EU states, notably demanding two years ago that the Irish government take back up to 13 billion euros from Apple Inc.

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