Google fights $5 billion antitrust fine in EU appeal

LUXEMBOURG (CN) — There were harsh words on all sides as a week of hearings over Google’s allegedly anti-competitive behavior opened before the EU’s second-highest court. 

The General Court of the European Court of Justice will be hearing arguments for five days — an unusually long session — as Google’s parent company Alphabet tries to fend off a 4.34 billion euro ($5 billion) fine for abusing the dominance of its Android mobile operating system.

“Far from justifying the biggest fine the commission has ever imposed, Android is, in truth, an exceptional success story of the power of competition in action,” lawyer for Meredith Pickford said in his opening statements before the Luxembourg-based court. 

The European Commission, the EU’s executive body, announced the fine in 2018 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 the Chrome browser. 

The EU also didn’t equivocate. In its opening statement, European Commission lawyer Nicholas Khan described Google’s behavior as “abusive.”

“Google’s conduct denied any opportunity for competition,” he said, referring to the company’s practice of pre-installing Google Search and Chrome on the Android system.  

The commission has fined the Silicon Valley giant multiple times, $9 billion worth of fines in all, for abusing its market position during the tenure of its competition commissioner Margrethe Vestager.

“These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere,” Vestager said when announcing the $5 billion fine at the heart of this case. 

The case is being widely watched and both sides have their share of backers before the court. FairSearch, a group that lobbies against Google’s search dominance, brought the original complaint that lead to the investigation, has joined the case on the side of the commission.

“The restrictions at issue mutually reinforced and aggravated the anticompetitive effects of one another,” FailSearch’s lawyer Thomas Vinje told the 5-judge panel. 

Czech search engine Seznam, the European Consumer Organisation, the German Federal Association of Digital Publishers and Newspaper Publishers, French search engine Qwant and the Association of German Art Historians have also joined the case against Google. 

Meanwhile, Google has found friends with The Developers Alliance, a software developers lobbying group; Computer & Communications Industry Association, a non-profit that lobbies on technological issues; German device manufacture Gigaset; HMD, the Finnish phone maker which took over Nokia; and Norwegian web browser developer Opera.

“The commission view would not enhance but would rather decrease opportunities for browser competition,” Opera’s lawyer Marcus Glader told the court. 

Most of Monday’s arguments focused on whether Google has a dominant market share in the mobile operating systems market. Google argued that it has a competitor: Apple. In Europe, some 70% of mobile devices run Android, but lawyers for Google claimed that 30% of new iPhone users made the switch from an Android device. There is “intense, unrelenting competition between Apple and Android,” Pickford said. 

Google also reiterated that its Android system is open source, and thus free for developers to use. It maintains the operating system and bears the costs of doing so.

“Google has to find ways to recoup that expense, so its solution is to include apps that will generate revenue,” Pickford said. 

But Vinje, the lawyer for the group who brought the original complaint, described this as a “bait and switch strategy.” His organization characterized Google’s approach as luring developers in with the promise of a free operating system but then forcing them to include a number of other Google products. 

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 in internet search to undercut competitors of its Comparison Shopping Service. When the fine was levied in 2017, it was the highest amount ever given. 

While investigating that case, the commission also discovered evidence that Google also took advantage of its search dominance to promote its targeted ad product, AdSense. Google is also appealing the 1.49 billion euro ($1.7 billion) fine in that case. Last month, the EU announced it was opening a fourth investigation into Google, this time into whether Google is abusing its market dominance in online advertising services. 

Hearings will continue on Tuesday. 

Follow Molly Quell on Twitter.

Follow @mollyquell

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