Google was fined $5 billion, an equivalent of 4.34 billion euros, by the European Union for illegal practices. Google was said to have engaged in illegal contracts with handset manufacturers that put Google services in front of users thereby enabling it dominate the market. Google has used Android as a vehicle to cement the dominance of its search engine, these practices have denied rivals the chance to innovate and compete on a fair scheme. Presently, Google has a market share of more than 90 percent for general Internet search, licensed smart mobile operating systems and app stores for Android software.
According to the European Union, Google ensures that Google Search and Chrome are pre-installed on practically all Android devices sold in Europe. Users who find these apps on their phones are likely to stick with them and do not download competing apps in numbers that can offset the significant commercial advantage derived on pre-installation. This act reduces the incentives for manufacturers to install and for users to seek out competing apps.The EU antitrust charged Google with using its dominant Android operating system to marginalize rivals following a three-year investigation by the European Union.
The European Union has given google 90 days to change the way it puts search and web browser apps on Android mobile devices, as well as a $5 billion fine, setting a global record for antitrust penalties. However Google has said that it would challenge the ruling at the EU courts.
The EU’s decision would bring the running total of Google fines to about 6.7 billion euros. It could soon be followed by more fines from a probe into online advertising contracts.
Following the announcement of EU’s decision, shares in Alphabet, owner company of Google, went down 0.5 percent in pre-market trading in New York on Wednesday.