Google, EU square off over record $5 billion antitrust fine

LUXEMBOURG (CN) — “Staggering,” “headline-grabbing” and “inappropriate” were just some of the ways Google lawyers described the 4.34 billion euro ($5 billion) fine to the European Union’s second-highest court Thursday.

The tech giant is contesting a 2018 finding by the European Commission that Google abused the dominance of its Android operating system. The General Court of the European Court of Justice is hearing the appeal.

The Luxembourg-based court scheduled an unusually long week of hearings for the dispute, which opened on Monday with harsh words on all sides. On Thursday, the parties wrangled over the amount that should be taxed against Google.

Google asked the court to use its “unlimited discretion” to reduce or totally eliminate the fine. The commission had announced the fine following a three-year investigation into whether Google illegally used its dominance in the smartphone market to promote other Google products, such as Google Search and its Chrome web browser.

The European Commission says its fine was appropriate for Google’s behavior between 2011 and 2018. The company shifted tracks following the decision and began charging developers for use of the Android operating system and stopped requiring them to bundle other Google apps with the OS.

Genevra Forwood of White & Case LLP, representing Google, told the five-judge panel that the fine was especially egregious since her client had not deliberately intended to commit anti-competitive behavior.

The company “could not have known its conduct was an abuse,” she said, as the EU had never brought a case before involving an open-source operating system such as Android. As open-source code, Android software is publicly available; any programmer may customize or develop their own version of the operating system.

Over the last week, Google has argued that it recouped the cost of maintaining Android by pre-installing its lucrative search app on Android devices, claiming the behavior wasn’t anti-competitive because users were free to change which search engine they used.

“Google simply could not have been unaware of the anti-competitive nature of its conduct,” commission lawyer Anthony Dawes argued. He cited a 2009 blog post written by now-Google CEO Sundar Pichai in which the company accused Microsoft of anti-competitive behavior for bundling Internet Explorer with the Windows operating system. Google backed the commission in that case, which Microsoft eventually lost, costing the firm a nearly billion-dollar fine in 2012.

Google also argued that the commission calculated the fine incorrectly, complaining that it was based on 2017 sales, which was an especially successful year for the company. Forwood claimed Google’s turnover was 10,000% higher that year than the year before and requested that the court, if it found that the company had broken the rules, to recalculate the fine based on the company’s average revenue during the time of the infringement.

The commission shot back, pointing out that the fine amounted to only 4.5% of its 2017 revenue, less than half of the statutory maximum of 10%.

The Android case is just one of three Google has pending before the court. Last year, the General Court heard arguments in the “Google Shopping” case, in which the European Commission fined Google 2.4 billion euro ($2.6 billion) for allegedly abusing its monopoly on internet search engines to undercut competitors of its Comparison Shopping Service.

Google is also appealing the 1.49 billion euro ($1.7 billion) fine it picked up, also in 2016, for taking advantage of its search dominance to promote its targeted ad product, AdSense.

Closing arguments will be heard on Friday.

Follow Molly Quell on Twitter.

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