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Google can’t shake $4.2B antitrust slap from European Union

Brussels has never responded to anticompetitive behavior with as enormous a fine as it gave Google here in 2018.

LUXEMBOURG (CN) — Abuse of market dominance in the mobile phone market will cost Google $4.2 billion, the European General Court ruled Wednesday, giving only a 5% reduction to the original fine. 

The 2018 fine was the result of a three-year investigation in which the European Commission, the EU’s executive branch, found that found the Silicon Valley-based Google had used its dominance in the smartphone market to promote other Google products, such as Google Search and the Chrome browser.

Android was installed on 80% of mobile phone devices in the European Union when the fine was issued. Though the commission said Google had paid phone makers like Samsung and HTC to preload Google Search directly onto their devices, Google’s lawyers attributed the widespread use of Android to the supposed superiority of the product. 

Google and its parent company, Alphabet, have denied any wrongdoing. Downplaying its dominance of the mobile phone market, the search titan cited “intense, unrelenting competition between Apple and Android" in its appeal of the fine. Alphabet attorneys for also questioned how the company could have known Google would violate competition rules on products it provides for free, pointing out the EU had never brought a case before involving an open-source operating system such as Android.

"We are disappointed that the Court did not annul the decision in full. Android has created more choice for everyone, not less, and supports thousands of successful businesses in Europe and around the world,” the company said in a statement. 

In his opening statements before the European General Court in Luxembourg last year, European Commission lawyer Nicholas Khan said argued that “Google’s conduct denied any opportunity for competition."

The General Court did shave about $200 million off the original 4.34 billion euro ($4.4 billion) fine from Brussels, agreeing with Google about the calculation of revenue-sharing agreements it made with third parties. 

"The General Court largely confirms the commission's decision that Google imposed unlawful restrictions on manufacturers of Android mobile devices and mobile network operators to consolidate the dominant position of its search engine," Judge Anna Marcoulli said Wednesday, reading the decision aloud. 

Consumer-protection organizations applauded the ruling. “This shows the European Commission got it right. Google can no longer impose its will on phone makers. Now they may open their devices to competition in search and other services, allowing consumers to benefit from increased choice,” said Thomas Vinje, spokesman and counsel for FairSearch, which was a plaintiff in the case.

The EU investigation was instigated by a complaint made by the Google watchdog in 2013.

It’s the second win in less than a year for competition commissioner Margrethe Vestager, who has focused on cracking down on what she sees as tech giants flouting EU rules. Last year, the same court upheld a $2.7 billion fine against Google for illegally promoting its own shopping-comparison service over rivals. The company announced in January that it would appeal the decision. 

Vestager’s office has had mixed results in Luxembourg. Earlier this year, the court overturned a $1.2 billion antitrust fine against Intel for giving rebates to computer manufacturers to shut out rivals. It also annulled a $1.05 billion antitrust fine against U.S. chipmaker Qualcomm for paying smartphone maker Apple not to use chips from rival companies.

Brussels has since adopted the Digital Markets Act, which cracks down on how tech giants can operate in the European Union. Set to take effect next year, the new regulations ban companies from promoting their own products via their own platforms and limit how they can use personal data. 

Both Google and the commission can appeal Wednesday’s decision, though neither said if they planned to do so. "The Commission will carefully study the judgment and decide on eventual next steps,” it said in a statement. 

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