The European Commission says the company has used the software to unfairly expand its search engine dominance and “denied European consumers the benefits of effective competition”.
The $5bn charge, which Google will appeal, amounts to the biggest fine ever imposed by a regulator against a single firm.
At a press conference in Brussels on Wednesday afternoon, EU competition commissioner Margrethe Vestager said Google had used its clout to ensure Android phones were “locked down in a Google controlled ecosystem”.
The commission said Google required manufacturers to preinstall Google search and browser apps if they wanted their phones to have access to the Google app store.
It said the company paid manufacturers and network operators to keep competitor search engines off their phones and also “obstructed the development of competing mobile operating systems which could have provided a platform for rival search engines to gain traffic”. Android accounts for 74 per cent of the mobile market.
The European competition authority says the company must “bring its illegal conduct to an end within 90 days in an effective manner” or face additional penalty charges.
Google confirmed it will appeal the decision.
“Android has created more choice for everyone, not less,” a spokesperson for the company said. “A vibrant ecosystem, rapid innovation, and lower prices are classic hallmarks of robust competition. We will appeal the commission’s decision.”
The US tech giant is already challenging a fine by the European Commission, levied based on Google’s allegedly anticompetitive practices around its price comparison tools. Since that fine was imposed, the company has made changes to the way it displays search results; it is unclear whether similar changes will be made to Android.
The commission said Google has “effectively” already paid the previous fine through bank guarantees into a closed account. If the appeal fails, the money will be sent to EU member states to spend as they wish, using the same formula as EU contributions are made under.
Ms Vestager is also running a third investigation into the company, looking at the AdSense technology used to place adverts.
The latest charge takes the total fine from the EU’s recent antitrust investigations to $6.7 billion and Google may be hit by yet another substantial fine when the third investigation concludes.
Ms Vestager told reporters in Brussels: “Google has used Android as a vehicle to cement its dominance as a search engine. These practices have denied rivals a chance to innovate and to compete on ... merits. They have denied European consumers the benefits of effective competition in the very important mobile sphere. This is illegal under EU antitrust rules.”
The competition commissioner said preinstalling Google search on its devices was “an advantage that cannot be matched” by competitors, making it harder for rivals to compete fairly, and harming consumers.
“Any company is welcome to do business in our single market but they need to comply, they need to play by EU antitrust rules and these rules are set in place for very simple reasons: to protect European consumers and effective competition,” Ms Vestager said.
She added it was important “technology serves us, and not the other way around”.
The fine is worth roughly the same as the amount contributed to the EU each year by the Netherlands but accounts for around half a month of revenues for Alphabet, Google’s parent company.
The huge charge is likely to inflame tensions between the European Union and the United States; with the two economies locked in a nascent trade war since US president Donald Trump imposed tariffs on European steel this year.
Europe’s stern treatment of US technology giants has been high on the list of concerns of American trade officials, who see the tough approach as back door protectionism. European Commission president Jean-Claude Juncker is set to visit the White House for talks with Mr Trump next week.
Ms Vestager downplayed the potential for conflict with the United States over the Google fine, stating “US colleagues want fair competition just as well as we do”.
“There is a respect that we do our job,” she added. “This is also my impression, that this is what they want in the US.”
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