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More than one year after the European Union hit Google with a record $2.72 billion antitrust fine over search engine abuses, regulators are reportedly on the verge of levelling an even larger fine related to the Android mobile operating system.
While the fine could technically be as high as $11 billion, it likely won’t be that large. But many observers are betting it will be bigger than last year’s.
So what’s this case all about? How can a company be accused of abusing a product that’s free?
Here are five things to know about the case ahead of the decision, which is expected to possibly land later this week:
- The charges: Almost two years ago, EU regulators accused Google of using Android to try to extend its dominance in desktop search to mobile. Because smartphone manufacturers are often required to install Google products, such as its Chrome browser and search app and apps like YouTube, the EU is arguing that the company is limiting competition.
- But, but, but …: Naturally, Google begs to differ. The company argues that the launch of Android in 2007 not only helped numerous handset makers jump into the smartphone revolution, it enabled the creation of those devices at dramatically lower costs and ensured that there would be robust competition against Apple’s iPhone and iOS ecosystem. Plus, there’s nothing stopping users from downloading other apps. As Google likes to say, competition is just a click away.
- Maybe, but still …: While the EU may concede some of those points, it counters that in many cases Google’s contracts with handset makers are too binding, and sometimes include financial incentives. The result is that six of the top 10 smartphones apps downloaded in Europe’s biggest markets are Google apps. Startups just can’t compete against that kind of dominance and, realistically, consumers passively accept the convenience of the default smartphone apps from Google.
- What’s at stake: The money, of course, though many will note that the amount won’t make a dent in Google’s annual revenues. But perhaps the bigger sting could come if the EU requires Google to unbundle its apps from Android and related agreements. Though such apps are entrenched in users’ daily habits, separating the apps from future Android smartphones could still diminish their market share. Google is counting on app usage not only for ad sales, but for the continued collection of data that helps improve its overall products and potentially drives future data-related endeavors. And while handset makers might enjoy more freedom around their use of Android, they may rightfully begin to worry if Google had less financial incentive to continue development of the platform.
- Is that it?: No. Google is still appealing its search engine fine, based on a ruling that the company used its search engine to favor its own shopping results over competitors like Yelp. Google also faces an EU investigation into abuses related to the online advertising market.
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