$4.3 Billion Penalty! Google Suffers Setback in Court Fight Over Android Phones to Topple Record EU Fine

Google lost most of the first round of its battle to topple a record 4.3 billion-euro ($4.3 billion) European Union antitrust fine that struck at the heart of the U.S. tech giant’s power over the Android mobile-phone ecosystem.

Google lost most of the first round of its battle to topple a record 4.3 billion-euro ($4.3 billion) European Union antitrust fine.  (AFP)

Google lost most of the first round of its battle to topple a record 4.3 billion-euro ($4.3 billion) European Union antitrust fine that struck at the heart of the U.S. tech giant's power over the Android mobile-phone ecosystem.

In a boost for EU antitrust chief Margrethe Vestager, judges upheld the vast majority of the European Commission's arguments, but cut the penalty to 4.1 billion euros after finding faults in some of the regulator's analysis and that Google's right to a fair hearing had partly been infringed.

“The General Court largely confirms the commission's decision that Google imposed unlawful restrictions on manufacturers of Android mobile devices and mobile network operators in order to consolidate the dominant position of its search engine,” the Luxembourg-based EU tribunal said in a statement.

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The Android case is one of a trio of decisions that have been the centerpiece of Vestager's bid to rein in the growing dominance of Silicon Valley. She's fined Alphabet Inc.'s Google more than 8 billion euros and has since opened new probes into the company's suspected stranglehold over digital advertising.

“We are disappointed that the court did not annul the decision in full,” Google said in an emailed statement. “Android has created more choice for everyone, not less, and supports thousands of successful businesses in Europe and around the world.”

The judgment is a “victory for the European Commission and a vindication of FairSearch's 2013 complaint that triggered the case,” said Thomas Vinje, a lawyer for the FairSearch coalition, which includes Oracle Corp. and TripAdvisor Inc.

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Wednesday's ruling can be appealed to the bloc's top court, the EU's Court of Justice.

The commission in its 2018 decision accused Google of three separate types of illegal behavior that helped cement the dominance of its search engine.

First, it said Google was illegally forcing handset makers to pre-install the Google Search app and the Chrome browser as a condition for licensing its Play Store -- the marketplace for Android apps.

Second, the EU said Google made payments to some large manufacturers and operators on condition that they exclusively pre-installed the Google Search app.

It was on this point that EU judges found fault in the commission's analysis, saying the regulator hadn't provided enough evidence.

Lastly, the EU said the Mountain View, California-based company prevented manufacturers wishing to pre-install apps from running alternative versions of Android not approved by Google.

While the EU claimed that Google's actions were an illegal restraint on trade, the company said the EU's findings undermined a business model that allowed it to provide the Android software for free while it generated ad revenue.

‘Illegal Conduct'

Despite the EU court appeal, Google had to comply with an ultimatum by the commission “to bring its illegal conduct to an end in an effective manner.”

Proposed tweaks included allowing mobile device makers partners to develop “forked” smartphones for Europe, and allowing them to license the Google mobile application suite separately.

Google last year proposed further changes, including to scrap a fee and add more mobile search apps for users to choose from on new Android phones, which the EU welcomed as “positive.”

Google's contracts with smartphone makers over Android are also at the center of two antitrust lawsuits pending in the US against the search giant by the Justice Department and state attorneys general.

The case is: T-604/18, Google and Alphabet v. Commission.