Google prepares to final EU judgement over Android antitrust case

Android figurines (Source: Google. Copyright: Google)

Android figurines (Source: Google. Copyright: Google)

A final word on the thorny EU vs Google case over Android antitrust charges could arrive as soon as next month, according to people familiar with the matter. Late last week, Reuters announced that the EU antitrust investigation into Google’s operative system Android could be on the way of concluding shortly, and that the American tech giant could face a world-record breaking fine already in the coming weeks. Indeed, the potential ruling by Brussels could top the record € 2.4 billion ($2.8 billion) fine against the search giant for other alleged antitrust abuses related to shopping services, and could even reach the 10 percent of Alphabet’s annual turnover: 11 billion dollars.

Background

In 2015 the European Commission accused Google of using its dominant Android mobile operating system to block competitors. The preliminary view by the European Commission was that the Mountain View, California-based company had abused its dominant position and unfairly restricted competition by pre-installing Android apps on smartphones. “The commission is concerned that Google’s behaviour has harmed consumers by restricting competition and innovation”, Margrethe Vestager, the EU competition Chief, said at those times. “Rival search engines and mobile operating systems have not been able to compete on their merits”.

In 2016 then, almost exactly a year after formally opening the investigation, the European Commission officially filed formal charges against the search giant for anticompetitive behaviour related to Android. In multiple formal responses to the EU’s watchdog, Google has always denied any wrongdoing, and objected to basically all of the EC’s premises. Kent Walker, senior Vice President and general counsel for Google, said in 2016 that Android ecosystem “carefully balances the interests of users, developers, hardware makers, and mobile network operators”. “Android hasn’t hurt competition, it’s expanded it”, Mr. Walker said in a formal Google response to the European Commission.

Looming judgement

But despite such clear-cut appeals by the Mountain View, California-based tech company, the European Commission is now expected to proceed in full against Google, according to people familiar with the matter. Last Thursday, the Financial Times and Reuters were among the first news outlets to announce that some judgement on Google’s ongoing antitrust Android case could be passed as soon as next month. Reuters reported that, according to three people with direct knowledge of the matter, the European Commission could issue its decision in the week of July 9, and that the penalty is likely to top the record 2.4-billion-euro ($2.8 billion) fine handed out to Google last year for unfairly favouring its shopping service.

World record fine

Indeed, the European Commission has the power to impose fines up to 10 percent of a business’ global turnover. In this case, the size of the potential fine could be as high as $11 billion, the 10 percent of Alphabet’s (Google’s parent company) annual turnover. And although it’s considered unlikely that Google will be fined the full $11 billion, anything over $2.8 billion would set a new record.

Complex matter

According to Reuters, Google tried to act quickly against the worst and recently sought a closed-door hearing in a bid to present its case to senior Commission officials and national competition agencies. Reuters quoted one of its secret sources as saying that Google acted after it was told of new details and evidence which the regulator was allegedly planning to use against the company, but that the requested was denied.

Potential impact

The potential impact of such a mammoth punishment is still unknown. Last year’s $2.8 billion penalty neither caused a shock to Google’s finances nor led to any significant changes to the way the search giant was doing business in the Old Continent, but it is actually the core of this judgement to be some kind of headache for Google. Android OS is indeed Google’s crown jewel, representing the Californian company’s most widespread and fastest growing business.

Android is used in more than 80 percent of smartphones on the market right now and – speaking just of the European Union – it powers more than three quarters of all smartphones within the bloc. It is then pretty easy to understand why a direct hit at this part of the company could have more serious connotations for Google’s future growth plans in Europe.

The EC has been investigating Google also in a third antitrust case, where the search giant was accused of blocking rivals in its online AdSense search advertising network. According to Reuters’ sources, the case is likely to drag on to the end of the year or even later.

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