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The European Union hits Google with a $5 billion fine

This is the second multibillion-dollar fine the EU has handed the company in just over a year.

A smart phone with Google displayed on it. Leon Neal/Getty Images
Emily Stewart covers business and economics for Vox and writes the newsletter The Big Squeeze, examining the ways ordinary people are being squeezed under capitalism. Before joining Vox, she worked for TheStreet.

The European Union hit Google with a $5 billion fine on Wednesday for breaking antitrust laws by pushing device makers using its Android operating system to bundle other Google services on its product. This marks the second time in just over a year Europe has fined the tech giant for anticompetitive practices.

The European Commission on Wednesday said it would fine Google €4.34 billion, or about $5 million, for “illegal practices regarding Android mobile devices to strengthen dominance of Google’s search engine.” It alleges that the Mountain View, California-based company has imposed illegal restrictions on device manufacturers and mobile network operators since 2011 by forcing them to pre-install its apps and services as a bundle, including the Google Search app, the Google Chrome browser, and the Google Play Store for apps, and preventing them from selling devices running on alternative versions of Android that aren’t Google-approved. That, the commission said, unfairly pushes users into Google’s browser and search products and blocks competition from others.

The commission rejected Google’s argument that bundling its search and browsing apps with the Android operating system is necessary to monetize its investment in Android. And it said that Google made illegal payments to certain manufacturers and network operators to ensure the exclusive pre-installation of Google Search across Android devices.

“Our case is about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to Google search engine,” Margrethe Vestager, the European commissioner for competition, said in a statement. “In this way, Google has used Android as a vehicle to cement the dominance of its search engine. 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. This is illegal under EU antitrust rules.”

Google must implement the remedies suggested by the European Commission and end the practices deemed illegal within 90 days or face penalty payments of 5 percent of its global daily revenue for each day it’s not in compliance.

Europe has traditionally been tougher on big tech than the United States

The conversation about big tech has picked up in the United States in recent months in the wake of Facebook’s Cambridge Analytica scandal and renewed attention on whether tech giants such as Facebook, Twitter, and Google have been allowed to grow too big and too fast unchecked. But historically, it’s been Europe that has often taken the lead on addressing big tech and the antitrust and privacy issues that go with it.

A European court in May 2014 ordered Google and other search engines operating in Europe to allow individuals the “right to be forgotten,” letting them ask sites to delist certain search results relating to their name. In mid-2017, the European Commission hit Google with a $2.7 billion fine for unfairly favoring its own service over those of its rivals. It has also gone after Facebook, Intel, and Microsoft for antitrust violations.

In May, the EU enacted the General Data Protection Regulation or GDPR, a new privacy law to make sure users know and understand the data companies collect about them and consent to sharing it.

Google is still appealing the $2.7 billion 2017 fine and said it would appeal Wednesday’s decision and $5 billion fine as well. “Android has created more choice for everyone, not less,” a Google spokesperson said in an emailed statement. “A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition.”

Google CEO Sundar Pichai authored a blog post published on Wednesday arguing that Android has created more choice. The European Union disagrees.