European Competition Commissioner Margrethe Vestager has explained why Google will be fined a record 4.34 billion euro or $5 billion during her press meet.
Though Google CEO Sundar Pichai tried to win some more customers for its search engine via a new blog post, Google will consider today’s development as one of the trend setters in days to come.
EU antitrust regulators clearly said Google has used its Android mobile operating system to squeeze out rivals.
Mozilla, which makes the Firefox web software, said in a blog that the EU probe will help level the playing field for mobile browser.
DuckDuckGo, a search engine that doesn’t track users, said in a Tweet that Google’s actions have led directly to us having less market share on Android.
Strong warning
EU also ordered Google to halt anti-competitive practices in deals with smartphone makers and telecoms providers within 90 days or face additional penalties of up to 5 percent of parent Alphabet’s average daily worldwide turnover, Reuters reported.
The messages from Margrethe Vestager indicate that Google needs to worry about the future of its business.
Google froze Amazon out of the smartphone market, said Margrethe Vestager. Amazon tried to license its version of Android, FireOS, in 2012 and 2013, but Google’s licensing agreements made it unsuccessful. Amazon’s launch of Fire Phone in 2014 did not meet the expectation of the customers, Business Insider reports.
EU is currently investigating Google’s AdSense product. Competition authorities have said Google prevented third parties using its product from displaying search advertisements from Google’s competitors. Google denies this.
At present, Google dominates in several areas of the web and mobile space. It makes revenue by sharing personal information of their customers with marketing companies.
Google promotes partner websites and its own websites for making more revenue. Small or non-partners have no space in the web world dominated by Google.
Google does not even share proper response for its actions. Customers are supposed to know the reasons behind each action. Google maintains less transparency in its dealings with advt. buyers or publishers. Google makes several changes forcing developers to follow its footsteps to make some money.
“Google has used Android as a vehicle to cement the dominance of its search engine. 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,” Margrethe Vestager said.
The penalty is nearly double the previous record of 2.4 billion euros which the U.S. tech company was ordered to pay last year over its online shopping search service.
It represents over two weeks of revenue for Google parent Alphabet Inc. and would scarcely dent its cash reserves of $102.9 billion.
Google owner Alphabet generated about the same amount of money as the penalty every 16 days in 2017, based on the company’s reported annual revenue of $110.9 billion, Bloomberg reports.
Google’s parent company Alphabet said in a regulatory filing it would accrue the fine in the second quarter of 2018.
“We are concerned that today’s decision will upset the careful balance that we have struck with Android, and that it sends a troubling signal in favour of proprietary systems over open platforms,” Google CEO Sundar Pichai said in a blog.
The EU enforcer dismissed Google’s argument of competition from Apple, saying the iPhone maker was not a sufficient constraint because of its higher prices and switching costs for users.
Android, which runs about 80 percent of the world’s smartphones according to market research firm Strategy Analytics, is the most important of a trio of antitrust cases against Google.
“The reality is that as long as they’re delivering great utility to their consumers, consumers will still use those platforms. If they do, advertisers will be drawn to those platforms, too, because the ROIs (return on investment) are very difficult to replicate anywhere else,” said Polar Capital fund manager Ben Rogoff.
The EU takedown of Google is six to eight years too late, with users paying the price, said Geoff Blaber of CCS Insight.
“There is a significant danger of unintended consequences that penalizes the consumer. This ranges from increased fragmentation and greater app inconsistency to increases in hardware cost should Google decide to change or adapt the Android business model,” Geoff Blaber said.
Lobbying group FairSearch, whose 2013 complaint triggered the EU investigation, welcomed the ruling, saying it could help restore competition in mobile operating systems and apps.
Google CEO Sundar Pichai will not get enough support from the industry because of its sheer dominance in the web and mobile space. With this development, Google will be under strong scrutiny of most regulators. Facebook will also be looking for changing its business model under pressure.
Baburajan K
