E.U. Fines Google $5.1 Billion In Android Antitrust Case
BRUSSELS — European authorities increased their efforts to rein in Silicon Valley Wednesday by fining Google a record $5.1 billion for abusing its power in the mobile phone market, a steep antitrust penalty that is among the most aggressive regulatory moves ever made against American technology companies.
The 4.34 billion euro fine far surpassed the €2.4 billion, about $2.8 billion, the European Union levied against Google last year over the company’s unfair favoring of its own services in internet search results. The new penalty highlighted how aggressively European authorities are pushing to regulate tech firms in areas like antitrust, privacy, taxes and the spread of misinformation and hate speech.
The ruling strikes at a core element of Google’s hugely profitable business model: providing phone makers such as Samsung and Huawei its Android operating system if they agree to prioritize its search bar, Chrome browser and other apps over those of the company’s rivals.
In addition to being hit with the hefty fine, Google must now decouple the Android system from its other services in Europe, potentially losing users and advertising revenue.
The case has parallels to a similarly significant action against Microsoft in the early 2000s, when it was heavily penalized in Europe for using its power in the personal computer market to stamp out rivals. In a reversal of fortunes, Google, then a young upstart, was among those to complain about Microsoft’s practices at the time.
“Google has used Android as a vehicle to cement the dominance of its search engine,” said Margrethe Vestager, Europe’s antitrust chief. “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 E.U. antitrust rules.”
The fine announced on Wednesday, she said, “reflects the seriousness and the sustained nature” of Google’s actions.
Regulators in Europe have already adopted tough new privacy rules that countries elsewhere are beginning to use as a template. Officials here have also investigated tech companies’ tax practices, called for closer scrutiny of artificial intelligence and added strict measures requiring social media companies to more forcefully combat false news and extremist content.
Under the decision announced Wednesday, Google has 90 days to end its anticompetitive practices. If it fails to do, it faces penalties of up to 5 percent of the worldwide average daily revenue of its parent company, Alphabet.
Google said it would appeal the decision, and the case is likely to drag on for years. The company must deposit the money in a holding account while the legal process unfolds. If it ultimately loses the appeal, the fine will be distributed among the European Union’s member states.
The long-anticipated ruling arrived at a politically delicate period, with Europe and the United States engaged in an escalating trade conflict in which both sides have imposed tariffs on an array of products, from alcohol to aluminum. Last week, on a trip to Brussels, President Trump reiterated his complaints that American businesses were at a disadvantage in Europe. Jean-Claude Juncker, president of the European Commission, the bloc’s executive arm, is to visit Washington next week for talks with Mr. Trump.
The ultimate effect of the ruling on Wednesday may be muted given that Europe has largely acted alone in taking regulatory action against Silicon Valley titans. Lawmakers and regulators in the United States have mostly taken a hands-off approach that has allowed big tech companies to expand their influence, though there have been signs recently of shifting attitudes and a tougher stance by Congress.
Google’s services remain immensely popular with customers, and its stock price, profits and revenue continue to soar. In the three years that the European Commission carried out its investigation, annual revenue for Alphabet has grown to $111 billion from $75 billion. Google has also strengthened its dominance in the mobile phone market, with more than 1.25 billion Android handsets sold globally last year, according to the research firm IDC.
The European Union’s case against Google underscores the broader challenge regulators face in overseeing the digital economy. By the time the authorities home in on an area deserving of scrutiny, the market may have moved on.
“Fast-moving markets are where competition law is most important,” said Jonathan Kanter, a partner at the law firm Paul Weiss and a former antitrust investigator for the Federal Trade Commission. But “when you have cases that are many years old, you’re fighting old battles instead of the next one.”
In the end, the fine’s long-term impact may well be dwarfed by the changes to Android that Google is being forced to make.
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