Google hit with record fine after EU ruling

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Google hit with record fine after EU ruling
Google hit with massive fine.

Google has been fined €4.3 billion for breaching anti-competition regulation. This is a record fine and the highest ever issued by the EU. It is however not the first time the global tech giant has been fined by the EU. The company had previously been fined €2.4 billion on similar grounds for abusing its market dominance. To many, this figure may seem insignificant in the grand scheme of Google’s operations but when compared with last year’s profit figures of €12.6 billion, this fine represents close to 40% of the company’s annual profit.

The EU came to their decision after carefully researching Google’s dominance in the market. When looking at mobile operating systems, close to 80% of all mobile phones use the Android system. The other most dominant system, Apple’s iOS, was not deemed to be a direct competitor to Google’s Android. The EU’s commission found that Google illegally exploited this dominance in order to obstruct healthy competition. The key element of this breach was Google demanding makers of Android devices to install Google systems as a trade-off for using the Android Play store. This included forcing manufacturers to continue to download updated versions of Android, thus locking them into the system without an exit strategy. Furthermore, the company demanded that manufacturers use the Google search engine as opposed to other alternatives such as a Safari and Yahoo. As Google represents 95% of all searches on Android phones, this too was deemed a breach of the anti-competition regulation.

This investigation was first launched due to complaints from companies such as Microsoft and Nokia in 2013. They believed that Google had been unlawfully favouring its Android partners by offering better deals at cheaper rates. From this the EU commission began their investigation and notified Google with formal charges in 2016. Further speculation surrounds how Google is allegedly forcing websites that use their search bar from showing competing ads, another abuse of their dominance.

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The onus now shifts to Google who have been given 90 days to pay the fine and decide how they will alter their Android contracts to remove the unlawful provisions. The contracts will then be reviewed again by the commission to ensure they are in line with EU regulation. Failure to meet these requirements could see Google’s parent company Alphabet being punished. However it must be noted that Google is expected to appeal this decision.

The ramifications of this decision have further increased pressure on these large tech companies such as Google. For the past decade, they have dominated the business environment and continued to reap the rewards. Could this decision be the first step in putting an end to their dominance? Similar issues arose in Facebook regarding their privacy policy and how users were being left vulnerable. Facebook has also been monitored. Therefore with the continued rise of tech companies today it is important we remain vigilant as to their operations. There is no doubt of the benefits they provide us but this must all remain within the law to ensure a fair and safe business environment for all.

Image credits: rvlsoft / Shutterstock.com

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