The European Commission has fined Google $5 billion for violating EU antitrust laws — specifically, by forcing manufacturers of Android phones to pre-install the Google search app and the Chrome web browser.

"Google has used Android as a vehicle to cement the dominance of its search engine," Commissioner Margrethe Vestager said in a statement. "These practices have denied rivals the chance to innovate and compete on the merits."

The tech giant plans to appeal the decision, a spokesperson tells NPR.

Last year, the European Commission fined Google $2.72 billion for antitrust violations. That time, it found Google was using its search service to improperly promote its shopping service. </s> , Brussels, Belgium, Jul 18 – Google faced a record EU anti-trust fine of 4.3 billion euros on Wednesday over its Android smartphone system, in a ruling that risks a fresh clash between Brussels and Washington.

EU Competition Commissioner Margrethe Vestager is expected to say that the US tech giant abused Android’s dominant market position to boost usage of its own search engine and browser.

The new sanction would nearly double the previous record EU anti-trust fine of 2.4 billion euros, which also targeted Google, in that case for the Silicon Valley titan’s shopping comparison service in 2017.

The decision, which follows a three-year investigation, comes as fears of a transatlantic trade war mount due to President Donald Trump’s decision to impose tariffs on European steel and aluminium exports.

Vestager is set to announce the penalty against the US tech giant at a news conference in Brussels at 1100 GMT. A source close to the matter told AFP that the fine would be 4.3 billion euros ($5 billion).

“The fine is based on the length of the infraction, but also on whether antitrust authorities believe there was an intention to commit the offence, and whether they excluded competitors or not,” said another European source.

Danish former minister Vestager, who has targeted a string of US tech titans, spoke by telephone with Google chief Sundar Pichai on Tuesday night to tell him about the decision in advance.

Vestager is expected to say that Google shut out rivals by forcing major phone makers including South Korea’s Samsung and China’s Huawei to pre-install its search engine and Google Chrome browser, thereby freezing out rivals.

They were also made to set Google Search as the default, as a condition of licensing some Google apps. Google Search and Chrome are as a result pre-installed on the “significant majority” of devices sold in the EU, the European Commission says.

An EU complaint formally lodged in April also accuses Google of preventing manufacturers from selling smartphones that run on rival operating systems based on the Android open source code.

Google also gave “financial incentives” to manufacturers and mobile network operators if they pre-installed Google Search on their devices, the commission said.

Under EU rules Google could have been fined up to 10 percent of parent company Alphabet’s annual revenue, which hit $110.9 billion in 2017.

Vestager’s campaign against Silicon Valley giants in her four years as the 28-nation European Union’s competition commissioner has won praise in Europe but angered Washington.

Brussels has repeatedly targeted Google over the past decade amid concerns about the Silicon Valley giant’s dominance of internet search across Europe, where it commands about 90 percent of the market.

As well as the Android and Google Shopping files, it also has a third investigation underway, into Google’s AdSense advert-placing business.

The EU ordered Apple in 2016 to pay Ireland 13 billion euros in back taxes that the iconic maker of iPhones and iPads had avoided by a tax deal with Dublin.

It has also taken on Facebook over privacy issues after it admitted that millions of users may have had their data hijacked by British consultancy firm Cambridge Analytica, which was working for Trump’s 2016 election campaign.

But Brussels has had US tech giants in its sights for a decade in a half, since it imposed a huge 497 million euro fine on Microsoft in 2004 for anti-competitive behaviour and ruled it must make changes to its Windows system.

The Google decision comes just one week before European Commission chief Jean-Claude Juncker is due to travel to the United States for crucial talks with Trump on the tariffs dispute and other issues.

Transatlantic tensions are also high over Trump’s berating NATO allies on defence spending at a summit last week, over his summit with Russian leader Vladimir Putin, and over the US president’s pull-out from the Iran nuclear agreement and Paris climate deal.

Google will appeal the EU decision Wednesday to slap a record 4.34 billion-euro ($5 billion) antitrust fine over the use of its Android operating system, a company spokesman said.

“Android has created more choice for everyone, not less,” Google spokesman Al Verney said in a statement. “We will appeal the (European) Commission’s decision.” </s> European Union regulators slapped Google with a record €2.4 billion ($2.7 billion) antitrust fine on Tuesday, the latest broadside fired at big American tech companies doing business in the region.

The European Commission found that the U.S. tech giant denied "consumers a genuine choice" by using its search engine to unfairly steer them to its own shopping platform.

Regulators said that Google must change its behavior within 90 days or face additional penalties.

"What Google has done is illegal under EU antitrust rules," said Margrethe Vestager, the bloc's top antitrust official. "It denied other companies the chance to compete on the merits and to innovate. And most importantly, it denied European consumers a genuine choice of services and the full benefits of innovation."

Google (GOOGL) said in a statement that it tries to show ads in ways that are helpful for buyers and sellers.

"We respectfully disagree with the conclusions announced today," a Google spokesperson said. "We will review the Commission's decision in detail as we consider an appeal, and we look forward to continuing to make our case."

The Commission said that Google acted illegally by giving priority placement in search results to its own shopping service, while relegating results from rivals to areas where potential buyers were much less likely to click.

It could have fined Google as much as 10% of its annual sales, or roughly $9 billion.

The $2.7 billion fine represents just over 2.5% of Google's revenue last year and Alphabet, Google's owner, had $92.4 billion in cash as of end of March.

Vestager said Google's competitors could claim compensation in national courts within the EU. She said hundreds of companies, including some based in the U.S., complained about the way Google displayed its shopping service.

Shares in Alphabet dropped by 1.2% in premarket trading.

Tuesday's fine dwarfs the previous EU record antitrust penalty of €1.06 billion ($1.2 billion) imposed on Intel (INTC) in 2009. Intel has been fighting to overturn that decision ever since.

Google's regulatory headache in Europe doesn't end with the online shopping case, which dates back to 2010.

The EU has also accused the Silicon Valley titan of abusing its market position by imposing restrictions on Android device manufacturers and mobile network operators.

It is also investigating the company's ad placing service, AdSense.

Related: Nike is the next U.S. company in Europe's crosshairs

American firms have come under increased scrutiny in Europe on issues related to tax and competition.

Apple (AAPL) is fighting a European demand that it repay €13 billion ($14.7 billion) in back taxes to the Irish government.

Facebook (FB) was fined by antitrust regulators in May for misleading officials over its takeover of messaging service WhatsApp. The same month, Amazon (AMZN) agreed to change its distribution agreements with e-book publishers to address antitrust concerns raised by the Commission.

And in early June, antitrust officials launched investigations into claims that Nike (NKE) may have broken EU laws by restricting how traders can sell licensed merchandise. Comcast's (CCV) Universal Studios is being investigated on the same grounds.

Vestager rejected any suggestion of anti-American bias, telling reporters on Tuesday that an analysis of investigations her department has launched found that U.S. companies were not being disproportionately targeted.

-- Paul R. La Monica contributed reporting. </s> Google was fined $5 billion by the European Union and ordered to change the way it puts search and web browser apps on Android mobile devices, setting a global record for antitrust penalties.

The penalty — the same amount the Netherlands contributes to the EU budget every year — is far higher than any other dished out by the U.S., Chinese or other antitrust authorities. More significantly, Google was given 90 days to stop what the EU said were “illegal practices” on contracts with handset manufacturers that push Google services in front of users.

“Google has used Android as a vehicle to cement the dominance of its search engine,” EU Competition Commissioner Margrethe Vestager said in an emailed statement. “These practices have denied rivals the chance to innovate and compete on the merits.”

Google has built a massive business of banner and videos ads, thanks largely to its central role on Android devices. Google will account for a third of all global mobile ads in 2018, according to research firm eMarketer, giving the company around $40 billion in sales outside the U.S. Google risks losing that traction if it is forced to surrender its real estate on millions of Android phones.

Google immediately said it would challenge the ruling at the EU courts.

“Android has created more choice for everyone, not less,” Google spokesman Al Verney said in an emailed statement. “A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition.”

The EU’s decision would bring the running total of Google fines to about 6.7 billion euros after last year’s penalty over shopping-search services. It could soon be followed by more fines from a probe into online advertising contracts.

 The European Commission fine exceeds last year’s then-record 2.4 billion-euro penalty following an investigation into Google’s shopping-search service. Google owner Alphabet Inc. and the commission both declined to comment on the Android fines.

Alphabet generated about the same amount of money as the record penalty every 16 days in 2017, based on the company’s reported annual revenue of $110.9 billion for the year.

Any appeal by Google wouldn’t change its need to comply with the EU order, unless it gets the EU court to allow “interim measures” that halt the commission findings.

The EU said Google ensures that Google Search and Chrome are pre-installed on “practically all Android devices” sold in Europe. Users who find these apps on their phones are likely to stick with them and “do not download competing apps in numbers that can offset the significant commercial advantage derived on pre-installation.”

Google’s actions reduce the incentives for manufacturers to install and for users to seek out competing apps, it said.

 The probe targeted contracts that require manufacturers of Android phones to take Google’s search and browser apps and other Google services when they want to license the Play app store, which officials say is a “must-have” for new phones.

The EU also found illegal Google’s “significant financial incentives” to telecoms operators and manufacturers that exclusively install Google search on devices. Rivals couldn’t compete with these payments, making it difficult for any other search engine to get their app pre-installed. The EU said Google stopped doing this in 2014.

Google’s contracts also prevented handset makers selling phones using other versions of Android, the EU said. This hampered manufacturers from making devices using Amazon.com Inc.’s Fire OS Android version, it said.

The “decision hits Google the hardest of all current antitrust investigations by the commission,” said Andreas Schwab, a German lawmaker at the European Parliament. “Today’s decision and fine are a logical consequence, as this is a clear anticompetitive behavior to me.”

Google has previously said it will argue that the EU is wrong and that it doesn’t block users or handset manufacturers from installing other apps. In its view, an EU ruling will harm app developers and customers by undercutting Google’s business model of giving away Android software and generating revenue from mobile advertising. That keeps smartphone prices low, it says.

Google has a market share of more than 90 percent for general Internet search, licensed smart mobile operating systems and app stores for Android software, the EU said in 2016.

Vestager said her decision wouldn’t prevent Google from monetizing the Android operating system and recoup the investments it has made.

Regulators rejected arguments that Apple Inc. competes with Android, saying Apple’s phone software can’t be licensed by handset makers and that Apple phones are often priced outside many Android users’ purchasing power. Users face “switching costs” to move from Apple to Android and would continue to face Google Search as a default on Apple devices. </s> Google was hit by a record-breaking fine for antitrust violations in Europe today. The European Commission will levy a €2.42 billion ($2.7 billion) penalty on the tech giant, far surpassing the €1.06 billion fine slapped on Intel in 2009, the previous record. Under EU law, a maximum fine of 10% of annual revenues can be levied for antitrust misdeeds; that would have translated to $9 billion, based on Google parent company Alphabet’s 2016 revenues, so it could have been even worse.

Even before the massive fine was announced, the jockeying over how to frame the punishment was underway. A draft letter is being circulated in Washington, DC, that claims the EU is “unfairly targeting” American companies, according to the Financial Times (paywall). Although the letter is in the Consumer Technology Association’s name, a senior Google lobbyist had been reportedly promoting it to lawmakers. The tech firm later distanced itself from the letter, the FT reported. Quartz has contacted Google for comment. No other companies have signed the letter yet, the FT says.

Opposing Google’s effort is a group of American companies, including tech heavyweight Oracle, who have published their own letter, welcoming the commission’s action and dispelling the anti-American argument, Recode reported. The fine is “necessary and appropriate, not provincial,” the letter reads. “We have watched Google undermine competition in the United States and abroad,” it continues. The signatories include News Corp. and Yelp, in addition to Oracle, all of whom have lodged complaints against Google with the commission in the past.

The long-running Google case, which began in 2010, centers on allegedly anti-competitive practices by the search giant around its shopping service. The commission says Google unfairly favors its own shopping search results; Google denies any wrongdoing. According to Margrethe Vestager, the European Commissioner for Competition:

The shopping case is just one of three outstanding antitrust investigations against Google in Europe. The other two focus on how Google distributes its Android mobile operating system and the terms it offers to websites displaying its ads. Those cases could also have blockbuster fines attached to them when they finally conclude.

Read this next: These are the EU’s reported plans to break up Google’s monopoly powers </s> EU Hits Google With $5 Billion Fine For Pushing Apps On Android Users

Enlarge this image toggle caption John Thys/AFP/Getty Images John Thys/AFP/Getty Images

Updated at 9:15 a.m. ET

The European Commission has fined Google $5 billion for violating the European Union's antitrust rules — specifically, by forcing manufacturers of Android phones to install the Google search app and the Chrome Web browser.

"Google has used Android as a vehicle to cement the dominance of its search engine," Commissioner Margrethe Vestager said in a statement. "These practices have denied rivals the chance to innovate and compete on the merits."

The tech giant plans to appeal the decision, a Google spokesperson tells NPR.

"Android has created more choice for everyone, not less," the company says. "A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition."

Last year, the European Commission fined Google $2.72 billion for antitrust violations. That time, it found Google was using its search service to improperly promote its shopping service.

The new fine — 4.34 billion euros, or just over $5 billion — sets a world record for such antitrust penalties, Bloomberg reports. And if Google doesn't change its business practices, the cost could grow even higher, with penalty payments added after 90 days.

The European Commission says the large fine is appropriate because of the "duration and gravity" of the antitrust violations.

The executive body says that about 80 percent of smart devices in Europe run on Android. It's not illegal to dominate a market, the European Commission says — but companies aren't supposed to "abuse their powerful market position by restricting competition."

Google licenses its Android operating system to third-party phone manufacturers. The issue, the EU says, is that Google requires Android device-makers to pre-install the Google search and browser apps on "practically all" devices sold in Europe; in the past, the company used financial incentives to further encourage pre-installation. That makes it hard for other search apps to compete, the EU says.

Another problem has to do with rival operating systems. Source code for the Android system is shared online, allowing third parties to modify it and create "forks," or versions of Android not approved by Google. (Amazon's Fire devices, for example, run a "fork" of Android.)

Google has prohibited companies that make Android devices from making and selling any other devices that run Android forks. That gives Google too much power over competition between different operating systems, the EU says.

Google forcefully objects to the ruling, calling it a a rejection of Android's entire business model.

In a blog post, CEO Sundar Pichai said the decision "ignores the fact that Android phones compete with iOS phones." (The European Commission decided that Apple products don't adequately "constrain Google's market power" in part because iPhones are more expensive, and because iPhones use Google search by default anyway.)

Phones typically come preloaded with dozens of apps, not just Google apps, and it's easy to remove them and add new apps instead, Pichai writes. He also says that the rules imposed by Google are meant to "ensure technical compatibility," and that they're optional.

"No phone maker is even obliged to sign up to these rules — they can use or modify Android in any way they want, just as Amazon has done with its Fire tablets and TV sticks," Pichai writes.

Because Google makes the Android platform available for free, the company only makes money off the phones if Google apps are installed and used, Pichai says.

The case is reminiscent of a 2009 agreement between Microsoft and the EU. The EU said that Microsoft was violating antitrust rules by selling computers with Internet Explorer as the default browser, and Microsoft agreed to offer users a choice of browsers instead.

Bloomberg opinion columnist Alex Webb points out a key difference between the two cases. This time around, there's no requirement to promote competitors' apps. </s> The European Union fined Google a record $5 billion Wednesday for using the market dominance of its Android mobile operating system to force handset makers to install Google apps, reducing choice for consumers.

EU Competition Commissioner Margrethe Vestager said Google went against EU rules when it required mobile phone producers to pre-install the Google Search and browser apps as a condition for licensing Google's app store. She said Google also paid big producers to exclusively pre-install the Google Search app.

Vestager said that "companies must compete on their merits," playing by antitrust rules that favor consumers and open markets, and not restrict competition.

Google said it would appeal. "Android has created more choice for everyone, not less," said company spokesman Al Verney.

The EU's fine is the biggest ever imposed on a company for anticompetitive behavior.

Vestager said that once the size of the company and its turnover is taken into account, the 4.34 billion euro fine is not disproportionate. Google parent company Alphabet made $31.15 billion in revenue in the first three months of the year.

In June last year, regulators already fined Google 2.42 billion euros ($2.8 billion) for favoring its shopping listings in search results.

The ruling comes at a sensitive time for trans-Atlantic relations, with U.S. President Donald Trump lambasting the EU as a "foe" only last week. The U.S. has imposed tariffs on EU steel and aluminum this year and the EU has responded with tariffs on American goods. The U.S. is now also considering taxes on imports of European cars.

The U.S. has also complained that the EU has mainly targeted U.S. companies — including Microsoft and Apple — for breaking competition or tax rules.

In her role, Vestager has continued that tough regulatory approach, but dismissed suggestions there was anything personal.

"I very much like the U.S.," she said, but added such a ruling "has nothing to do with how I feel. Nothing whatsoever."

"We have to protect consumers and competition to make sure consumers get the best of fair competition," she said. "We will continue to do it, no matter the political context."

As technology's impact in modern life spreads, European regulators have set the pace in shaping rules for the industry, which tends to get a freer hand in the U.S. New European rules on data privacy that went into force this year influenced the way some companies operate outside of the region as well, particularly after high-profile data breaches, including at Facebook.

Wednesday's ruling on Google caps an investigation that goes back at least three years. Regulators came out with a preliminary ruling in April 2016 in which they said Google had market shares exceeding 90 percent in most European countries in the realm of licensable mobile operating systems. They said Google abused that share by forcing manufacturers to take its apps and by preventing them from selling altered versions of Android, which is technically open-source software.

At the time, the European Commission said it wanted to ensure that manufacturers are free to pre-install apps of their choosing and allow for competition in services such as internet search.

Google has opposed the Europeans' definition of the market, arguing its real competition is Apple, even though Apple doesn't license its iOS operating system to other device makers.

It also argues that it allows other apps to be pre-installed alongside Google apps, and that agreements not to support altered versions of Android enable it to provide a baseline experience on tens of thousands of different devices.

Functionally, preventing an altered version — or "fork" — of Android also prevents Samsung, a hugely popular maker of Android devices through its Galaxy line, from breaking off and taking much of the Android ecosystem with it.

Google argues that its main way of making money from Android is through advertising and the sale of content and apps, unlike Apple, which makes its profits from device sales. If its business activities are too harshly constrained, the argument follows, Google might no longer be able to provide Android for free to handset makers. </s> The European Union on Wednesday slapped Google with a $1.7 billion fine for the company’s efforts to block its competitors in the online advertising market.

The decision covers a decade-long period from 2006 to 2016 in which the EU said Google used its market position to clamp down on the ability of third-party rivals to display search ads. Among the methods the EU said Google used included exclusivity contracts that prevented website owners from including search results from rivals of Google.

The EU also said that beginning in 2009, Google began implementing “premium placement” clauses, which required publishers to request a minimum number of Google ads and also leave the most-profitable spaces on their search result pages for Google ads.

Margrethe Vestager, the EU’s commissioner in charge of competition policy, said in a statement that Google’s restrictions were “illegal under EU antitrust rules,” and “denied other companies the possibility to compete on the merits and to innovate – and consumers the benefits of competition.”

Kent Walker, Google’s senior vice president for global policy, said in a statement that company was working to ensure its products meet all the EU’s business standards.
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• Stanford unveils new AI institute, built to create ‘a better future for all humanity’ “We’ve always agreed that healthy, thriving markets are in everyone’s interest. We’ve already made a wide range of changes to our products to address the Commission’s concerns,” Walker said. “Over the next few months, we’ll be making further updates to give more visibility to rivals in Europe.”

It was the third fine the EU has levied against Google in the past two years. In 2017, the EU handed down a $2.7 billion penalty on Google for using preferential methods to promote its own shopping service over rival options, and in July of last year, European regulators slapped Google with a $5 billion fine for the abusing its market position to give preference to its Android operating system. </s> Google rules out using AI for weapons or surveillance

Google says Gmail messages sometimes read by third parties

Google prepared Wednesday to be hit with huge EU fine for freezing out rivals of its Android mobile phone system in a ruling that could spark new tensions between Brussels and Washington.

EU Competition Commissioner Margrethe Vestager spoke by telephone with Google chief Sundar Pichai on Tuesday night to tell him about the decision in advance, a source close to the matter told AFP.

Bloomberg reported that Google will be fined $5 billion, citing sources related to the matter.

Vestager is expected to announce that Google abused its dominant position in the market by making tie-ups with phone makers like South Korea's Samsung and China's Huawei.

Two European sources told AFP the fine would be "several billion euros" without giving further details. EU rules say Google could be fined up to 10 percent of parent company Alphabet's annual revenue, which hit $110.9 billion in 2017.

"The fine is based on the length of the infraction, but also on whether antitrust authorities believe there was an intention to commit the offence, and whether they excluded competitors or not," said another source close to the matter.

The European Commission, the 28-nation EU's executive arm, refused to comment.

The long-awaited decision comes as fears of a transatlantic trade war mount due to President Donald Trump's shock decision to impose tariffs on European steel and aluminum exports.

Denmark's Vestager has targeted a series of Silicon Valley giants in her four years as the 28-nation European Union's antitrust chief, winning praise in Europe but angering Washington.

The case against Android is the most significant of three complaints by the EU against the search titan, which has already been hit with a record-breaking 2.4-billion-euro fine in a Google shopping case.

Brussels has repeatedly targeted Google over the past decade amid concerns about the Silicon Valley giant's dominance of internet search across Europe, where it commands about 90 percent of the market.

In the Android file, the European Commission has accused Google of requiring mobile manufacturers such as Samsung and Huawei to pre-install its search engine and Google Chrome browser on phones, and to set Google Search as the default, as a condition of licensing some Google apps.

Google Search and Chrome are as a result pre-installed on the "significant majority" of devices sold in the EU, the commission says.

The complaint formally lodged in April also accuses Google of preventing manufacturers from selling smartphones that run on rival operating systems based on the Android open source code.

Google also gave "financial incentives" to manufacturers and mobile network operators if they pre-installed Google Search on their devices, the commission said.

The EU's biggest ever punishment targeted Apple in 2016 when it ordered the iconic maker of iPhones and iPads to pay Ireland 13 billion euros ($16 billion) in back taxes that it had avoided by a tax deal with Dublin.

The EU has also taken on Facebook over privacy issues after it admitted that millions of users may have had their data hijacked by British consultancy firm Cambridge Analytica, which was working for Trump's 2016 election campaign.

The Google decision comes just one week before European Commission chief Jean-Claude Juncker is due to travel to the United States for crucial talks with Trump on the tariffs dispute and other issues.

Transatlantic tensions are also high after Trump berated NATO allies over defense spending at a summit last week, over his summit with Russian leader Vladimir Putin, and over the US president's pull-out from the Iran nuclear agreement and Paris climate deal.
The European Commission fines Google €4.34 billion for breaching EU antitrust regulations, claiming that Google abused the dominant position of Android to promote their search product. Google announces it will appeal the ruling.