EU court largely upholds $4.3B antitrust fine against Google over Android practices

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The European Union’s second-highest court, the General Court, has largely upheld an antitrust fine that was issued to Google LLC over its business practices in the mobile industry. 

The General Court released its decision today. 

The European Commission, the EU’s executive branch, fined Google 4.343 billion euros or about $4.3 billion in 2018 over its business practices in the Android ecosystem. In particular, the penalty was issued over a collection of contractual restrictions that Google imposed on Android handset makers and wireless carriers.

The first set of restrictions applied to the search giant’s Play Store app marketplace. To access the Play Store, handset makers had to preinstall the Google Search and Chrome apps on their devices. According to the EU, this practice limited rival software makers’ ability to compete with the apps. 

The second set of restrictions that led to the antitrust fine against Google related to customized versions of Android. Google distributes Android under an open-source license. As a result, handset makers and other companies can create custom versions of the operating system.

Regulators determined that Google permitted handset makers to preinstall the Google Search and Play Store apps on their devices only if they limited how they use custom versions of Android. In particular, Google required companies to avoid equipping their devices with custom versions of Android that it didn’t approve.

Google also signed revenue sharing agreements with a number of handset makers and wireless carriers. Under the agreements, Google provided a share of its advertising revenue to companies that agreed not to preinstall a competing search engine on their devices.

In its ruling today, the General Court largely upheld the 4.3 billion euro fine that the European Commission had issued to Google. However, the court rejected the argument that Google’s revenue sharing agreements with Android handset makers and wireless carriers constituted a breach of antitrust rules.

A core component of regulators’ argument was that the revenue sharing agreements covered a significant part of the search market. “The General Court considers that statement to be unsupported by the evidence which the Commission set out in the contested decision,” today’s ruling stated.

The Court also found fault in a legal evaluation that regulators carried out to determine whether the revenue sharing agreements were anticompetitive. The evaluation used a legal method known as the AEC test. “The AEC test does not support the finding of abuse resulting from the portfolio-based revenue share agreements in themselves,” the General Court concluded.

Based on its findings, the General Court ruled that the fine against Google should be reduced from 4.343 billion euros to 4.125 billion euros. The fine was revised “in order better to reflect the gravity and duration of the infringement,” the ruling stated. 

Google can appeal the decision at the Court of Justice of the European Union, the EU’s highest court. The company may file an appeal within two months and 10 days.

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

Photo: Google