Google said it plans to appeal a record $5.1 billion antitrust fine handed down by the European Union regulators for restrictions imposed on Android device manufacturers and mobile network operators.
The European Commission announced the fine Wednesday, saying Google breached EU antitrust rules by placing contractual restrictions on device manufacturers who obtain Google's proprietary Android apps and services to run on the open-source Android operating system.
Specifically, the commission found Google's bundling of its Google Search app and Google Chrome browser along with its Google Play Store — all of which come preinstalled on Android smartphones — to constitute "illegal tying" in violation of EU rules. The commission also found that Google offered financial incentives to device manufacturers and mobile operators if they exclusively pre-installed Google Search on devices and said Google has prevented device manufacturers from using any alternative version of Android that was not approved by Google.
Google's primary business is internet search, were the company has a market share of more than 90% across most of the 31-state European Economic Area, the commission said.
"Google has used Android as a vehicle to cement the dominance of its search engine," said Margrethe Vestager, the EC commissioner in charge of the competition policy, in a press statement. "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. This is illegal under EU antitrust rules."
The EC has been taking an increasingly tough stance against Google and other U.S. tech firms. Last year, the EC fined Google $2.7 billion for abusing its dominance as a search engine by giving an advantage to Google's own comparison shopping service.
Google's parent company, Alphabet, said in a brief statement that the company would appeal the decision but that it would take a $5.07 billion charge in its fiscal second quarter to account for the fine. Assuming that the appeal is filed, the case is likely to take years to wind its way through the appeals process.
Google CEO Sundar Pichai posted a blog Wednesday criticizing the EC ruling for being off base, arguing that Android gives consumers more choice, not less.
The posting read, in part: "The decision ignores the fact that Android phones compete with iOS phones, something that 89 percent of respondents to the commission’s own market survey confirmed. It also misses just how much choice Android provides to thousands of phone makers and mobile network operators who build and sell Android devices; to millions of app developers around the world who have built their businesses with Android; and billions of consumers who can now afford and use cutting-edge Android smartphones."
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