Google competition breach yields massive fine
First published by Author on July 20, 2018 in the following categories: Industry Latest and tagged with cma | market abuse
A Google competition breach has yielded a massive fine imposed by the European Commission over its behaviour surrounding Android phones.
The fine amounts to £3.9bn ($5bn) and is based on Google’s search-related revenue earned during the period the competition breach is said to have taken place.
The investigations into the Google competition breach stem back to 2015 and surround impositions of pre-installed browsers and search apps that it’s claimed has led to users not looking for alternatives, with Google paying huge sums to manufacturers to pre-install its own software.
Google competition breach an abuse of a dominant market position
The European Commission has said that the Google competition breach stems from behaviour that meant the tech-giant was able to illegally “cement its dominant position” in terms of search engine software and browser software.
According to the breaches that have been found, Google is guilty of the following:
- Google search app being pre-installed in android devices;
- Users must install Google Chrome to access Play App store;
- Large payments made by Google to manufacturers to pre-install their software;
- Preventing manufactures selling devices with competitor versions using the threat of refusing permission to pre-install their software.
It’s understood that these Google competition breaches resulted in just 1% of users installing a competitor search app, and just 10% installing a different browser. These are low figures, and clearly suggest a protectionist position from a dominant player in the market.
Parent company to appeal Google competition finding
Parent company, Alphabet, are to appeal the Google competition finding. This will be the second appeal they’re involved in over competition breaches, with a previous determination still in the appeal process over a separate £2.1bn fine for probes into their shopping comparison service.
Despite the fact that they reportedly have cash reserves in the sum of $103bn and could therefore easily afford the relatively small fine imposed, Alphabet believes that they allow for more choice for everyone with the market, and that they are not in breach of competition laws.
A potentially precedent-setting decision
The Google competition decision is potentially a matter that will change the face of the marketplace itself. The outcome of the appeal that Alphabet is planning to launch will therefore be a case we’ll be monitoring very closely.
In terms of the current decision, Alphabet has reportedly been given nine days to change its practices or they risk further fines amounting to potentially 5% of their average daily turnover.
Any major breach of competition laws must be taken seriously. If the Google competition case remains upheld post-appeal, the impact on the mobile market is set to be huge.