Google and EU head to court to decide the fate of €4.3 billion fine

·4-min read

A new chapter in the legal fight between Google and the European Union began on Monday as the tech giant headed to Luxembourg to appeal the record-breaking €4.34 billion fine for anti-competitive behaviour.

Brussels slapped Google with the headline-making penalty back in 2018, claiming the company had imposed "illegal restrictions" on devices operated with its own Android system in order to cement its dominant position in the market.

The Commission believes Google forces manufacturers of Android-powered devices to pre-install a trio of apps: Google Search, Chrome and the Play Store, which users access to download other apps. The executive also argues the company prevents phone makers to sell devices with alternative versions of Android.

These practices, Brussels says, stifle competition because they make it more difficult for other app developers to innovate and enter the market, and, in turn, deny consumers the benefits of free competition. Over 80% of smartphones in Europe run on Android.

Google obtains most of its revenue through its search engine: the company offers advertisers a series of tools to show users their products according to specific words and phrases. Advertisers choose from different bidding strategies to decide what placement works best for them.

The Commission believes that, by making the Search app mandatory for all Android devices, Google ensures phone owners continue to use its search engine as the default option to the detriment of other possible options. This increases Google's revenues and strengthens its dominant position.

"It is true that Google has invested a lot in the android ecosystem, it has allowed this ecosystem to flourish," Alexandre de Cornière, a tech analyst at the Toulouse School of Economics, told Euronews.

"What the European Commission is blaming Google for is that Google has abused its dominant position by forcing, by imposing some restrictions some contractor restrictions on phone manufacturers that make it more difficult for Google’s rivals in the search engine market and rival browsers, to get installed on manufacturers phone devices."

Google rejects all charges and says its free-of-charge, open-source Android system has helped the company compete with Apple, its main rival, while lowering prices for consumers.

"Android has created more choice for everyone, not less, and supports thousands of successful businesses in Europe and around the world. This case isn’t supported by the facts or the law," the company said, in a statement quoted by the Associated Press.

Google also argues that, even if certain apps come pre-installed in Android-powered devices, users are still free to download other products to replace them.

Pending fines and increasing scrutiny

The five-day hearing before the EU's General Court in Luxembourg will determine the fate of the €4.34 billion fine, the highest ever imposed by the European Commission as a result of an antitrust investigation. The amount was calculated according to the revenue Google earned from search advertising services inside the EU's single market.

The court's final decision is not expected until next year.

Google is currently facing two additional fines: €1.49 billion for abusive practices in online advertising and €2.4 billion for discriminating against some products in the results of its search engine.

In total, the company is battling more than €8.2 billion in EU antitrust fines.

Experts say that Google, which ranks among the top 10 most valuable companies in the world, can easily afford to pay the fines. However, continuing the anti-competitive behaviour might prove more difficult as governments and public authorities on both sides of the Atlantic increase their scrutiny over tech companies and put forward legislation to rein in their excesses.

Last year, the European Commission unveiled the Digital Markets Act (DMA), a far-reaching draft law that sets out strict rules for large online platform (so-called "gatekeepers") with the goal of guaranteeing free competition, open markets and wider choices for consumers. Google, together with Amazon, Facebook, Apple and Microsoft, is poised to fall under the gatekeeper category and therefore be subject to the new rules once the DMA is approved and enters into force.

The United States is also deploying its legislative power against Silicon Valley. In July, US President Joe Biden signed an executive order targeting anti-competitive practices, with particular attention to mergers conducted by large technology companies. Biden has appointed several prominent Big Tech critics for key roles in his administration.

"Since the start of the Biden administration, we’ve seen some big changes, so now big tech companies are under the fire of regulators in the US and it has even started to become more intense than in Europe," says de Cornière.

"There are threats of breaking them up and there are many lawsuits against them. So I think what we are seeing is some kind of convergence and perhaps the US taking the lead in the fight against big tech."

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