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July 19, 2018

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Google hit with record US$5b antitrust fine

Source: Agencies | 00:01 UTC+8 July 19, 2018 | Print Edition

EU antitrust regulators hit Google with a record 4.34 billion euro (US$5 billion) fine yesterday for using its Android mobile operating system to squeeze out rivals.

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

It represents just over two weeks of revenue for Google parent Alphabet Inc and would scarcely dent its cash reserves of US$102.9 billion. But it could add to a brewing trade war between Brussels and Washington.

EU antitrust chief Margrethe Vestager said she very much liked the United States, countering a reported remark by President Donald Trump that she “hated” the country.

“But the fact is that this has nothing to do with how I feel. Nothing whatsoever. Just as enforcing competition law, we do it in the world, but we do not do it in political context,” she said.

Google said it would appeal.

“We are concerned that today’s decision will upset the careful balance that we have struck with Android, and that it sends a troubling signal in favour of proprietary systems over open platforms,” Google CEO Sundar Pichai said in a blog.

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

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

“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,” Vestager said.

Asked on if breaking up Google would solve the issue, a call made by a number of Google foes, she said she was not sure if that was the solution.

“I don’t know if it will serve the purpose of more competition to have Google broken up. What would serve competition is to have more players,” Vestager said.

On concerns that Google may decide to charge for Android, Vestager said her ruling was not related to the way the company operates.

“This is not a judgment on a business model. There is still a possibility to monetize its operating system. Revenue from its app store is quite substantial,” she said.

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