Google appeals against EUR4. Billion Antitrust Fine – The European Union imposed a fine of billion four years ago after the bloc’s competition regulator discovered major violations in its Android mobile OS. However, the EU’s General Court has largely confirmed the Commission’s decision in a ruling that was issued today.
This is a huge win for the EU, which has seen a lot of antitrust decisions left unpicked by courts in recent years.
Reach for comment, a Google spokesperson sent this line:
We are disappointed that the Court didn’t annul the decision completely. Android offers more options for all, not less, and is supporting thousands of businesses around Europe and the globe.
The EU fine against Google for Android violations in July 2018 was a record-breaking amount at that time, and remains the highest EU antitrust sanction.
However, the General Court has slightly reduced the amount of the fine — setting the final amount imposed upon Google at (still record-breaking) EUR4. 125 Billions ($4.3B at the current currency conversion rates, which have seen the dollar & euro close to parity).
A spokesperson for the Court stated that the Court “largely confirms” the Commission’s decision to find that Google placed unconstitutional restrictions on Android device manufacturers and mobile network operators in an effort to consolidate its dominant position in search engines.
“The General Court deems it appropriate to impose a EUR4 fine to better reflect the severity and duration of the infraction. 125BN to Google. Its reasoning is different from that of the Commission .”
.
Google sought to claim that the Commission made an error in defining the relevant markets, and that it incorrectly rated the restrictions Google placed on device makers and carriers was one of a variety of arguments its lawyers offered to the Court.
The Court rejected most of its arguments. However, in the case of a preinstallation condition in portfolio-based revenue sharing agreements (with mobile manufacturers and carriers), the justices found fault with the Commission’s reasoning and some procedural errors, thus annulling that portion of the Commission decision.
A Court press release summarizing this ruling states “that partial annulment doesn’t affect the overall validity [infringement] finding…in the light of exclusionary effects which arose from the other abusive acts implemented by Google during infringement period” — however, this element of ruling explains why the slight downward revision to the final fine.
The Court stated that it considered “the intention of the implementation of unlawful practices and the value of relevant sales made to Google during the last year of its full involvement in the infringement” when determining the final amount.
Should Google wish to appeal the General Court decision to the bloc’s top court, the European Court of Justice (CJEU), it may only do so on a point of law — with a timeframe of two months and 10 days to file such a petition.
It is not clear if the company will attempt to appeal to the CJEU on a point-of-law basis. We were told by the company that it is reviewing the judgement before making any decisions on next steps.
The Commission was also contacted for comments.
Update – A spokesperson for the Commission sent this statement:
The European Commission has taken note of the General Court’s decision today, which largely confirms the July 2018 Commission decision that found that Alphabet and Google had abused their dominant position. The General Court largely confirmed that Google and Alphabet were fined by the European Commission and set it at EUR4. 125 billion.
The Commission will carefully review the judgment and determine what next steps to take.
At time of writing, competition chief Margrethe Vestager hadn’t posted publicly about the win. However, her Twitter account retweeted Court’s press release:
Image Credits: Natasha Lomas/TechCrunch
Google rivals and consumer groups were quick to applaud the Court’s decision.
Monique Goyens (director general of BEUC), the European consumer organisation, described the ruling as a “crucial win” for consumers in a statement.
“Today’s General Court decision on Google’s Android practices is important because it confirms Europe’s consumers need to have meaningful choices between search engines, browsers, and their smartphones and tablets. This Court ruling clarifies that Google cannot use its market position to unfairly exclude rivals through a complicated and illegal web of restrictions for phone manufacturers. She said that the ruling will ensure consumers have access to a more open digital environment. Many European consumers were forced to use Google’s search engine and Google Chrome browser on their mobile devices. Google’s restrictions on .”
prevented consumers from using more privacy-friendly and innovative services.
Ecosia, an environmentally-focused search engine that competes against Google search, has welcomed the ruling and highlighted how much marketshare Google retains in the region.
“Today’s decision is a significant win for the European Commission (EC). It is a continuation in a positive trend towards fair competition in the online market. Google still maintains a 96 market share on mobile devices in Europe. “Much remains to be done to bring about true fairness in the space — Google still maintains a 96.6% market share on mobile devices in Europe, down only 0.3% since 2018 when this ruling was initially made — thanks to the EC and European Parliament’s heroic efforts with the Digital Markets Act, this ruling strengthens the EU’s overall position as a leading regulatory force, capable of keeping up with fast-moving developments in the tech sector and taking the action necessary to hold tech giants accountable — something which European consumers and businesses alike will benefit from.”
The 2018 EU Android Decision
The 2018 EU Competition Commission’s decision against Android found that Google had abused its dominant position and imposed anticompetitive contractual restraints on manufacturers of Android OS-based mobile devices as well as mobile network operators. This was in some cases, since the beginning of 2011..
The three types of restrictions that the Commission sanctioned were contained in distribution agreements. These included those which required device makers to install Google Search and its Chrome browser apps before they could obtain a license from Google to use their app store — the popular Play Store. There were also certain ‘antifragmentation’ agreements Google required device makers to agree to not sell Android versions not approved by Google. Finally, there was the clause in’revenue sharing agreements’ where a portion of Google’s advertising revenue was shared with device makers and operators.
The Court disagreed with the assessment by the Commission of the restriction as abusive.
Google was also fined a large sum for its breaches and ordered to stop infringing on their rights four years ago. The bloc’s competition regulator gave the company the freedom to create its own remedy. After Google began offering Android users in the EU a choice screen, it quickly switched to a paid auction system for assigning slots. This created a skewed playing ground that penalized smaller, less-resourced players and those who were not for profit.
It was only after more pressure from the EU, that Google dropped the paid auction. Last year, Google switched to a free choice screen for all eligible participants.
At a similar time, it increased the number of participants shown, showing a “top five” (determined by market popularity, but displayed in random order — so Google is always one these top choices given its regional marketshare. If the user continues scrolling, seven additional options are displayed. Google will display the most relevant options if there are seven or more.
The Court’s decision largely upholding EU’s Android decision means that these choice screens will be around for a long time. As the EU begins to enforce new competition rules that will apply to the strongest so-called “gatekeepers” platforms, the bloc’s Digital Markets Act (DMA) is expected to see more regulation-driven interventions. It’s fair to say that EU legislators have taken their antitrust lessons from Google’s antitrust wrangles and baked them into the DMA’s proactive operational rules that will be imposed upon core platform services that are not included in the DMA. The legacy of Google’s antitrust enforcements will last a lifetime.
Europe is seeing an increase in antitrust activity
The EU’s antitrust unit has been active in investigating Google for the past five+years, landing a series of enforcements. This includes a $2.7B fine related to shopping search back in 2017 which Google failed to overturn on appeal.
Google also received $1.7 billion in a case relating to AdSense, its search advertising brokering business in 2019.. It is appealing the decision. )
The competition Commission has also opened a probe into Google’s advertising technology — it was launched in June 2021. Reuters also reported on Friday that the EU has widened its investigation.
The bloc is also investigating a deal between Facebook and Google — called ‘Jedi Blue .’
The U.K.’s Competition and Markets Authority is also conducting similar investigations into Google’s advertising technology. They also expressed concern about the mobile duopoly, one-half of which is Google Android.
While Germany’s antitrust investigation of the company touches on a variety of business fronts, it stepped up a gear when its regulator determined that the tech giant is subject to a special abuse control regime. This was established under a major reform of digital competitive rules also aimed at proactive responding to tech giants’ market power.
France also aggressively probed a range of concerns about Google’s competition. The company also dropped its appeal against a major antitrust penalty of over half a million dollars that France’s competition watchdog imposed in July 2021,. This was due to violations in the terms it negotiated with news publishers regarding copyright licensing.
All this regulatory activity leads to an increase in antitrust litigation in the region aimed at tech giants.