Commission imposes heavy fine on Google
The fine of DKK 32 billion was imposed following Google’s abuse of its dominant position on the market for general internet search. The fine is the largest ever imposed by the Commission.
The Commission’s decision of 18 April 2018
By senior intern Sebastian Willigenburg Andersen and assistant attorney Kristine Langgaard Stage
Google has been fined EUR 4.34 billion, equivalent to DKK 32 billion, for imposing illegal restrictions on Android device manufacturers and mobile network operators. The restrictions have ensured that consumers used Google Search, thus strengthening the dominant position of this search engine.
The Commission has identified three types of restrictions that amount to abuse in particular:
- Google has required manufacturers to pre-install Google Search and Google Chrome as a condition for using Google’s app store (Play Store).
- Google has paid certain large manufacturers of Android phones for pre-installing the Google Search app as the only search app on their devices.
- Google has prevented manufacturers wishing to pre-install Google apps from selling mobile devices with alternative versions of Android that were not approved by Google.
Illegal tying of Google’s app store and Google’s search and browser apps
In its license agreements (on the Android operating system) with device manufacturers, Google had made it a condition for using Google’s Play Store that the apps Google Search and Google Chrome were also pre-installed on all mobile devices.
The device manufacturers confirmed that Google’s Play Store was a “must-have” app as consumers expect to find it pre-installed on their devices and because it is difficult to download apps without it. By tying Play Store, Google Search and Google Chrome, Google had abused its dominant position and ensured that its own search engine was preferred over those of its competitors.
While users are free to download another search engine, there is evidence showing that a pre-installed search app is consistently used more than a search app which users have to download themselves.
Illegal payments conditional on exclusive pre-installation of Google Search
Google had also granted significant financial incentives to the largest device manufacturers on condition that they pre-installed Google Search as the only search engine on their mobile devices.
The Commission’s investigation showed that a rival search engine would have been unable to compensate a device manufacturer for the loss which the manufacturer would suffer from not using Google’s search engine. The reason is that if the manufacturer installed just one search engine from a Google competitor on a single device, the manufacturer would lose all the revenue from Google that it would otherwise have received. Consequently, the financial incentives were used as a means of restricting competition on the market.
Illegal obstruction of development and distribution of competing Android operating systems
Finally, Google had obstructed the development of alternative versions of Android that were not approved by Google (the so-called “Android forks”). In order to be able to pre-install Google Search and Google Play Store (which is a “must-have” app as noted above) on their devices, manufacturers had to commit not to develop or sell devices running on Android forks.
In imposing this requirement, Google had blocked an important channel for its competitors to introduce apps and services which could be pre-installed on Android forks.
Three-month time limit
Google has been ordered to bring its illegal conduct to an end within 90 days of the decision. If Google fails to do so, it may face fines of up to 5% pf Alphabet’s (Google’s parent company) average daily worldwide turnover.
Google has announced that it intends to appeal the decision. In that case, Google may apply for suspension of the Commission’s decision in which case Google will not be required to pay the fine until after hearing of the case, nor can Google be fined after expiry of the three-month time limit.
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