Google faces new EU anti-trust charges

BRUSSELS, Belgium – The European Union opened a new anti-trust battle with Google on Wednesday, April 20, charging the US tech giant with abusing the dominance of its Android mobile phone operating system.

The charges, which come one year after Brussels took on Google over its search engine, come as a huge blow to one of the company’s most strategic businesses and could change the face of the global smartphone sector.

EU Competition Commissioner Margrethe Vestager said Silicon Valley giant Google had used practices such as making manufacturers pre-install its market-leading search engine as the default in phones.

Vestager, a former Danish economy minister, said Brussels believed that “Google has abused its dominant position.”

“The preliminary conclusion from our investigations is that these practices breach EU competition law,” she told a news conference.

The Android operating system accounts for about 80% of the world market for mobile phones, far ahead of Google’s closest rival, Apple.

In its latest charge sheet, the EU accused Google of obstructing innovation by giving unfair prominence to its own apps, especially its search engine, in deals with mobile manufacturers such as Samsung or Huawei.

The company is also accused of restricting manufacturers from installing rival operating systems based on Android on their phones.

And in an unexpected charge, the EU accused Google of offering phone-makers financial incentives to exclusively install its search engine on devices.

The case is the second attack by the EU against Google after Vestager last year formally charged the company for abusing its dominance of the search engine market in Europe.

Taking both EU cases against Google together, the company risks a fine of 10% of worldwide global sales for one year, which would amount to a $7.4 billion (6.5 billion euro) fine on the basis of 2015 revenues.

‘Android is good’

Google now has 12 weeks to answer the charges, either by fighting them comprehensively and risking a huge fine or proposing remedies to satisfy Brussels.

Google said it would work with the EU to show that consumers benefited from Android.

“Android has helped foster a remarkable – and, importantly, sustainable – ecosystem, based on open-source software and open innovation,” Kent Walker, senior vice president and general counsel of Google, said in a statement.

“We look forward to working with the European Commission to demonstrate that Android is good for competition and good for consumers.”

The case against Android resembles one against Microsoft in which the EU in 2013 fined the software giant 561 million euros ($634 million) for failing to offer users a choice of web browser on its Windows operating system.

FairSearch, an umbrella group for plaintiffs against Google including Nokia and Tripadvisor, “applauded” the charges.

“Virtually every phone maker using Google Android in the European Union has bowed to Google’s demands, suppressing competition by other app makers and preventing free choice for consumers,” said Thomas Vinje, a legal counsel for FairSearch.

The EU’s tough line comes despite the fact that Canada on Tuesday, April 19, closed its own investigation into allegations Google abused its dominance in online search advertising, following in the tracks of the US.

Vestager rejected suggestions that Brussels was unfairly targeting US companies in her competition cases, with Apple, Amazon, and McDonald’s also in the EU’s crosshairs.

“If dominance is abuse then we have an issue… that has been the task no matter the flag of the company or the ownership,” Vestager said.

US-based INTEL, the world’s biggest chipmaker, was in May 2009 fined 1.06 billion euros, the EU’s biggest fine ever. – Alex Pigman, AFP / Rappler.com