Google facing record $5 billion fine over controversial Android practices (Updated)

Update #2, July 18, 2018 (09:33AM EST): In an update on the Google Blog, CEO Sundar Pichai has announced Google will appeal against its 4.34 billion euro fine it received earlier today.

Pichai outlined several arguments against the EU’s decision, stating that it “ignores the fact that Android phones compete with iOS phones,” and that it misses just how much choice “Android provides to thousands of phone makers and mobile network operators,” “millions of app developers,” and “billions of consumers.”

The EU has penalized Google for three practices relating to how it bundles its apps on other manufacturers’ Android phones.

“Phone makers don’t have to include our services; and they’re also free to pre-install competing apps alongside ours,” wrote Pichai, in the response post. “This means that we earn revenue only if our apps are installed, and if people choose to use our apps instead of the rival apps.”

Pichai rounded out the post by stating: “We are concerned that today’s decision will upset the careful balance that we have struck with Android, and that it sends a troubling signal in favor of proprietary systems over open platforms.”

You can read the full statement at the link.

Update #1, July 18, 2018 (07:45AM EST): The European Union (EU) has officially handed Google a 4.34 billion euro penalty for antitrust violations. The EU hit Google with the globally record-breaking fine after investigating its practices regarding app and service bundling on the Android platform.

EU Competition Commissioner Margrethe Vestager sent the following tweet on the subject:

Google has reportedly been given 90 days to amend its carrier and OEM contracts to comply with the EU’s rules, which could mean smartphone makers that use the Google Play Store no longer need to include Google products (like Chrome) by default on their handsets.

We’ve reached out to Google on the matter and will update this post should we receive a response.

Previous coverage, July 18, 2018 (06:16AM EST): The European Union (EU) will fine Google around 4.3 billion euros (~$5 billion) in antitrust penalties later today, according to a report from Bloomberg.

Citing a “person familiar with the EU decision,” Bloomberg said EU Competition Commissioner Margrethe Vestager informed Google CEO Sundar Pichai of the decision in a call yesterday.

The revelation follows an EU investigation into Google’s Android licensing requirements and its contracts with carriers. The Commission is said to have been investigating contractual stipulations regarding the pre-installation of Google apps and services on non-Google phones, as well as allegedly incentivizing the exclusive use of its products (find out more about that in our previous coverage).

The 4.3 billion euro figure would set a new record for an antitrust fine, being the highest penalty since the 2.4 billion euros (~$2.7 billion) the EU Commision fined Google last year. Google was penalized for giving its proprietary Google Shopping comparison tool an unfair advantage over the competition in its search engine rankings.

Though $5 billion is a lot of money for anyone, Google would no doubt recover quickly from the fine. Google makes around $30 billion in revenue per quarter right now and its parent company, Alphabet, turned over more than $100 billion last year.

What could have a more lasting effect on Google’s business is if the EU rules that smartphone makers no longer need to pre-install Google products on their phones in order to access the Google Play app store.

The fine is set to be announced at midday today. Stay tuned.