Europe To Fine Google Up To $11BN Over Abuse Of Market Dominance

It's been less than two weeks since the European Union's new GDRP data privacy rules took effect (forcing some US news sites to block European consumers outright) and already Brussels is preparing its next attack on US technology companies. According to the Financial Times, EU Competition Commissioner Margarethe Vestager, who has become possibly the most hated woman in Silicon Valley for her crusade against US tech firms, is preparing to penalize Google for "abusing its market dominance" through its Android operating system.

It won't be Google's first wire transfer to Brussles: the company has already been fined 2.4 billion euros by Vestager for "abusing its dominance in search". That case involved apparent abuses in Google's comparison-shopping service.

In the Android case, the commission could impose fines of up to $11 billion, equivalent to about half the company's 2016 Net Income. Google is also being investigated for unfairly banning competitors from websites that use its search bar and advertisements. The three investigations constitute a trio of EU actions against Google.


Google's Android operating system is used in 80% of the world's smartphones and is seen as a a key platform for growth as consumers increasingly do their web browsing on mobile devices. The investigation comes after the European Commission laid out a "charge sheet" detailing how Google's products and apps unfairly favored Android. As FT explains, the EU case takes aim at a key part of Google's strategy.

By contrast with the comparison shopping case, the Android case takes aim at a core part of Google’s strategy over the past decade: using its mobile operating system as a platform to push smartphone adoption of its search engine and smartphone app store.

Google denies wrongdoing but has seen no sign of the commission dropping its concerns or seeking a settlement to the case.

The Android case is the most commercially sensitive of all its battles with the commission, since it touches on business practices that have helped cement its position in the mobile search and advertising market.

When it unveiled its charge sheet against Google in 2016, the commission alleged that Google imposed licensing conditions for Android that favoured Google products and apps, such as Chrome and Google Play.

Meanwhile, Google has countered by accusing Brussels of misunderstanding the smartphone market, and some observers have speculated about whether Vestager's actions are an attempt by the EU to protect its markets from US tech giants.

Phonemakers were also prevented from running competing operating systems based on the Android open-source code, and the company offered financial incentives for exclusively pre-installing Google Search on phones.

The commission argued the behaviour consolidated Google’s dominance in general search, hampered the ability of rival mobile browsers to compete with Chrome and hindered the development of other operating systems, which it worried would reduce consumer choice and stifle innovation.

When she announced the charges in 2016, Ms Vestager said: "We believe that Google’s behaviour denies consumers a wider choice of mobile apps and services and stands in the way of innovation by other players, in breach of EU antitrust rules."

Google has publicly denied claims that pre-installed Google apps like search and Chrome block rivals from its operating system, a defense used previously by Bill Gates when Microsoft was similarly targeted. Competition, it says, is only a download away. The company says it's obligated to provide some basic apps to ensure smartphones work smoothly. Google introduced Android in 2007.

In any case, the biggest, most existential threat, to Google and its "almost $1 trillion in market cap" tech peers is regulation and anti-Trust intervention. If Google can continue to skirt along, while paying the occasions fine, there is nothing but upside for the company stock price, at least until those Bangladeshi fake ad click farms keep clicking.