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European Commission may slap Google with a game-changing fine over Android

EU antitrust czar will brief Google CEO ahead of massive fine

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Over the past several years, Google has faced three antitrust cases by the European Commission, regarding Google Shopping, AdSense, and Android’s dominance in the smartphone market. The Commission’s ruling regarding Android is set to arrive in a few days — and many are waiting to see whether this ruling will involve major implications for Android as a whole.

Last year, Google was ordered to pay a fine of $2.8 billion in a similar antitrust case, but experts now say that this most recent penalty could be even larger. While the fine can go as large as $11 billion, it’s expected that Google’s massive coffers will barely notice the loss — but it’s the possibility that the European Union may use this fine to push Google into making big changes that has caught the attention of most people.

How big will the fine be?

According to a report from The Washington Post, Margrethe Vestager, the European Union antitrust czar, is considering a fine “ranging into the billions of dollars” — marking the second time in two years that antitrust authorities have ruled against Google. According to a report from Reuters, Vestager will brief Google CEO Sundar Pichai on the fine on Tuesday, July 17, ahead of the ruling — which is expected in a matter of days.

“A competitive mobile internet sector is increasingly important for consumers and businesses in Europe,” Vestager said when first announcing the charges against Google. “We believe that Google’s behavior denies consumers a wider choice of mobile apps and services and stands in the way of innovation by other players, in breach of EU antitrust rules.”

Why is the EU fining Google?

Google’s problems began in 2016, when Brussels accused the company of leveraging its Android operating system to maintain a position of power in internet searches, including requiring phone makers to pre-install Google’s browser and search app in order to access other popular apps and the Google Play Store. Google is also accused of offering financial incentives to manufacturers who agreed to pre-install Google search on their handsets.

Even so, rivals and market watchers believe fines and regulations won’t make a significant difference. 

Outside of Apple’s iPhone, Google’s Android is the dominant operating system in the smartphone market. It’s typically unaltered, packing first-party apps such as Google Maps, Gmail, Google Search and so on, peppered with apps developed internally by smartphone makers. Usually, any “customization” relies on visual tweaks to the overall interface and special “launchers” that change the appearance of the home screen and app drawer. 

But isn’t there any competition?

Device makers have attempted to offer smartphones with altered, or “forked,” versions on Android. Amazon made such an attempt with its failed Fire Phone in 2014: A 3D-enabled phone powered by a modified version of Android the company calls Fire OS. It’s the same platform Amazon uses for its Kindle Fire-branded tablets, Fire TV, Echo, Echo Dot, and more. Meanwhile, Samsung’s use of Tizen initially seemed the end of Android on its smartphones, but the company still uses Google’s operating system on its Galaxy devices. 

That said, there is no real alternative to Android. Moreover, Google commands 90 percent of the European search market and provides revenue-sharing payments to smartphone makers who pre-install Google Search. Individuals siding with the European Commission claim the company provides strong incentives, too, leaving smartphone makers unable to promote alternatives to Google’s apps. Anything distributed outside Google Play could be considered untrustworthy by users. 

That’s because Android’s app-related problem spans years. In the early days, smartphone makers were altering Android to distinguish their products from those of competitors. Meanwhile, third-party app stores not governed by Google or device manufacturers lured in device owners. The resulting malware epidemic appeared to push customers to prefer “pure” Android builds and Google Play apps. The only exception is Amazon’s Android app store, which still must be side-loaded on Android devices. 

Seemingly to keep the “pure” theme intact, Google pushes smartphone makers to install the Chrome browser and other first-party apps if Google Play is present. But smartphone makers still have an option to install their own stores and apps, such as Samsung’s Galaxy Apps store on Galaxy-class smartphones. Obviously, Google isn’t completely banning third-party apps from Android, but the European Commission still seems to think that some type of regulation is in order. 

At the same time, European Commission sources claim that it can’t simply order Google to change its Android business under European law. If anything, the Commission can slap Google with a fine and make suggestions: Stop enforcing first-party app installation and stop paying device makers for installing Google Search. Will that make a difference in the overall Android picture? Possibly not, but don’t rule anything out until we’ve heard for sure. 

“Android is utterly dominant,” CCS Insight’s Geoff Blaber told Reuters. “Whatever the ruling, manufacturers are heavily reliant [on Android] so nothing is going to change dramatically.” 

Updated on July 17: Added news that Margrethe Vestager will brief Sundar Pichai ahead of the fine.

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