EU v Google: The $5 bn fine is one among the many imposed by European regulators

Shomik Sen BhattacharjeeJul 19, 2018 22:41:46 IST

Google has been fined a record €4.34 billion ($ 5 bn) by the European antitrust regulators for what it deems to be "illegal restrictions on the use of Android".

In a more detailed explanation on what these restrictions exactly are, the EU put out a detailed press release which talks about how Google has used Android as a vehicle to cement the dominance of its search engine. Competition commissioner Margrethe Vestager who tweeted the news about the fine was quoted in the release saying, "These practices have denied rivals the chance to innovate and compete on the merits," pointing out the foul-play involved.

European Competition Commissioner Margrethe Vestager addresses a news conference on Google in Brussels, Belgium. Reuters

The EU says that Google first made it compulsory for manufacturers to pre-install the Google Search app and the Chrome browser app if they wanted to license access to the Google Play Store. Basically, if a brand wanted users to have the Play Store pre-installed and ready to download apps, they would have to keep the Google Search and Chrome apps pre-installed as well. This was a violation on the EU's grounds, as manufacturers like Samsung and HTC have their own browsers which people generally ignore because of Chrome's popularity.

Secondly, Google made payments to large manufacturers and telecom service operators on the condition that they exclusively pre-installed the Google Search app on their devices. This again was difficult for companies to turn down since it was the might and scale of Google they were dealing with.

Vestager did mention in a press conference that Google stopped paying manufacturers to have the Google search app as the default search engine back in 2014 after the EU called foul.

She concluded by saying, "At a minimum, our decision requires Google to stop and not to re-engage in the three types of restrictions that I have described. In other words, our decision stops Google from controlling which search and browser apps manufacturers can pre-install on Android devices, or which Android operating system they can adopt. But it is Google’s sole responsibility to make sure that it changes its conduct in a way that brings the infringements to an effective end."

While this $5 bn fine is the highest that has been slapped on Google by the EU regulators, it isn't the first. It isn't even the first multi-billion dollar fine to be more precise. But it looks like Google still wants to take chances given its vast reach.

Google abusing its market dominance

The first instance of Google being pulled up after an investigation was back in 2016 when EU antitrust regulators ordered Google to stop paying financial incentives to smartphone makers to pre-install Google Search exclusively on their devices. The regulators also warned that a sumptuous fine may be in the offing.

A lobby group named FairSearch, supported by companies that wanted to ensure that they are not disadvantaged by search engine market dominance, took the complaint to the EU in March 2013. This was followed by a detailed investigation where Google was found involved in paying off OEMs since January 2011. Google later made amends and stopped the practice of bribing manufacturers to push Google Search.

But it did not end there.

The same investigation brought forth another inquiry which was underway for the Search end of things, where Google was accused of favouring its own shopping service over those of its rivals.

Google and European Union logos. Image: Reuters

Fined $2.7 billion for violations over shopping services

The investigation which started in 2016 went on into 2017 when the European Commission finally decided to slap a fine of $2.73 billion which back then was a record. The European Commission found Google systematically giving prominent placement to its own comparison shopping service called Froogle, at the time.

The EC also found that Google was demoting rival comparison shopping services in its search results by designing its search algorithms accordingly.

Google was asked to make amends within 90 days or face an additional penalty fine of up to 5 percent of the average daily worldwide turnover of its parent company, Alphabet.

Right to be Forgotten

Apart from abusing its market dominance and violating user trust, there was one more instance where Google tried to misuse its power and evade a regulation passed by European Court of Justice (ECJ) where it had ruled that “irrelevant” and outdated data should be erased on search results on request.

To summarise what had happened, Google listed itself as a media company which exempted it from being requested to remove the past results of individuals. However, in April this year, a British businessman won his legal action to remove search results about a criminal conviction in a landmark “right to be forgotten” case, forcing Google to concede.

Fines post GDPR

The General Data Protection Regulation kicked in on 25 May this year. And guess which companies were pulled up on day one for violations of GDPR regulations? Well, Google and Facebook of course. In fact, within hours of GDPR coming into effect, both the Silicon Valley giants were hit with privacy complaints which could potentially amount to $9.3 bn in total fines. Of course, this is a reported figure and the company hasn't been asked to pay it up front, but it gives an idea of the potential of more fine impositions on Google.

File image of Sundar Pichai. Reuters

Sundar Pichai not happy

Google CEO Sundar Pichai is expectedly not too happy with the judgment. Referring to the fact that Google's Android OS competes with Apple's iOS which is a closed ecosystem, Pichai maintained that Android still provides a lot of choices to phone makers and telecom service providers.

"To be successful, open-source platforms have to painstakingly balance the needs of everyone that uses them. History shows that without rules around baseline compatibility, open-source platforms fragment, which hurts users, developers, and phone makers...The Commission’s Android decision ignores the new breadth of choice and clear evidence about how people use their phones today." said Pichai, defending Google.

Pichai is his latest tweet promised that Google will appeal the EU's decision on Android.

European regulators have their eye on Google

The number of instances in which the European regulators have pulled up Google is noteworthy. With the $5 bn fine imposed on Google, the EC has made it clear that it will not stand for Google's monopoly and will ensure that there is a level playing field, for all the valid participants.

Even though these regulations and fine pertain to users within the European Union, there are immense lessons to be learned for countries especially like India, where Google is in search of its next billion users. With a data protection law expected to be coming soon in India, there are a lot of pointers from the EU regulations against Google and other internet giants, that we could take tips from, to ensure strong, consumer-focused data privacy and data protection regulations.