E.U. authorities in Brussels have fined Google $5.1 billion for abusing its power in the smartphone market. This is a record fine and the search engine giant also ordered to change its practices moving forward. The fine is one of the most aggressive regulatory actions against American tech companies. Many analysts think that this fine could inspire long-lasting changes on smartphones in the future.
Google was also fined almost half this amount last year for favoring its ads on search engines. The fine is a clear indication that Europe is starting to take a stand against unfair business practices by large technology companies. It’s not clear whether this will inspire officials in the US to start looking more closely at the practices of these tech giants. However, until now, authorities in the US have taken a hands-off approach in dealing with these companies.
The European Union wants Google to reduce its influence on the Android software that’s used in many smartphone brands. In fact, there were a number of solutions that were proposed by authorities in the region to help achieve this as part of the fine. Android is a key part of Google’s business and the OS is used in over 80% of all the smartphones in the world. The changes ordered by the EU will take effect in 90 days. The new rules will prevent Google from automatically including its own search engine and other apps on phones running the Android operating system. This will open the company to more competition in an industry that it has fully dominated over the last few years.
Margrethe Vestager, E.U. antitrust chief, said that Google has used Android as a tool to strengthen its massive dominance as a search engine. She argues that this practice has locked out rivals and their ability to innovate in an equal playing field. As such, European consumers have been denied the fair competition and the benefits it brings. According to Vastager, the size of the fine reflects the importance of this issue.
Google rejected the findings of EU authorities saying that it will appeal the fine. However, the process could drag on for years, and the company has been ordered to deposit the amount in a holding account during the entire legal process. If indeed the appeal is lost and Google is forced to pay the fine, the money will be equally distributed among EU members. In addition to this, even if the search engine giant files the appeal, it will still have to comply with the new directives over the coming 90 days. Failure to do this could attract a 5% fine on its total daily revenues in the EU.
The European Union has in the recent months been taking tough action against American tech companies. The timing of this latest $5.1 billion fine is also very delicate. The US and the EU have been engaged in an escalating trade battle. Many analysts believe that if the trade war escalates even more, big American tech companies that see the EU as a crucial market might be targeted.