Google fined twice by EU in 8 months (2 articles)

Google Fined $1.7 Billion by E.U. for Unfair Advertising Rules

NYTimes
European regulators said Google had violated antitrust rules by imposing unfair terms on companies that used Google’s search bar on their websites in Europe.CreditCreditPaulo Nunes dos Santos for The New York Times

LONDON — European authorities on Wednesday fined Google 1.5 billion euros for antitrust violations in the online advertising market, continuing its efforts to rein in the world’s biggest technology companies.

The fine, worth about $1.7 billion, is the third against Google by the European Union since 2017, reinforcing the region’s position as the world’s most aggressive watchdog of an industry with an increasingly powerful role in society and the global economy. The regulators said Google had violated antitrust rules by imposing unfair terms on companies that used its search bar on their websites in Europe.

Europe’s regulatory approach was once criticized as unfairly focusing on technology companies from the United States, but is now viewed as a potential global model as governments question the influence of Silicon Valley. Europe is at the forefront of a broad debate about the role of tech platforms like Apple, Amazon, Facebook and Google, and whether their size and power hurt competition.

With the announcement on Wednesday, the European fines against Google total roughly 8.2 billion euros, or $9.3 billion. But the bloc has not received any of the money yet; Google is appealing the earlier decisions, and is mulling whether to appeal the most recent ruling.

“Google has cemented its dominance in online search adverts and shielded itself from competitive pressure by imposing anticompetitive contractual restrictions on third-party websites,” Margrethe Vestager, Europe’s top antitrust watchdog, said in a statement. “This is illegal under E.U. antitrust rules.”

The fine centers on contracts that license the use of Google’s search bar on websites run by newspapers, blogs, travel services and other companies. European regulators said the operators of the third-party websites using Google’s search bar had been required to display a disproportionate number of text ads from Google’s own advertising services over competing digital advertising companies.

The practice, regulators said, undercut competitors, such as Microsoft and Yahoo, that were trying to challenge Google in search.

“There was no reason for Google to include these restrictive clauses in its contracts, except to keep its rivals out of the market,” Ms. Vestager said at a news conference in Brussels. She said the ruling covered 2006 to 2016, when Google stopped the practices.

Europe’s actions against Silicon Valley are influencing policy debates around the world, but some critics question the overall effectiveness of the penalties.

The European Union spent a decade investigating Google, a slow and deliberate process, during which the company’s business and power continued to grow. Annual revenue at Google’s parent company, Alphabet, reached $137 billion last year, compared with $22 billion a decade earlier. On Wednesday, Google shares rose 2 percent.

The Google cases highlight a larger question policymakers face in overseeing the digital economy.

“As it becomes increasingly clear that antitrust fines or after-the-fact remedies are not enough to bring vibrant competition to the market, governments will need to move to deeper tech sector regulation to remedy problems,” said Gene Kimmelman, a former antitrust official in the Justice Department who is now president of Public Knowledge, a consumer advocacy group. He suggested rules preventing tech platforms like Google from favoring their own services.

In the United States, where there has been limited regulation of tech companies, Senator Elizabeth Warren, Democrat of Massachusetts, has made breaking up Google and other tech giants a priority in her presidential campaign. This week, Representative David Cicilline, Democrat of Rhode Island and chairman of the House Subcommittee on Antitrust, Commercial and Administrative Law, called for a federal antitrust investigation of Facebook.

In response to the ruling on Wednesday, Google said, “Healthy, thriving markets are in everyone’s interest.”

Margrethe Vestager, the European Union’s top antitrust watchdog, discussing the penalty at a news conference in Brussels on Wednesday.CreditJohn Thys/Agence France-Presse — Getty Images

“We’ve already made a wide range of changes to our products to address the commission’s concerns,” Kent Walker, Google’s senior vice president for global affairs, said in a statement. “Over the next few months, we’ll be making further updates to give more visibility to rivals in Europe.”

The case is the last of three investigations the European Commission has pursued against Google, which has headquarters in Mountain View, Calif.

Last year, Ms. Vestager fined Google a record €4.34 billion for using its ownership of the Android mobile operating system to unfairly undercut rivals in the mobile phone market, a decision that also forced the company to change how it bundled its apps on smartphones. In 2017, the company was fined 2.4 billion euros for unfairly favoring its own shopping services over those of rivals.

The two previous rulings have not had a big impact on Google’s financial health, but they have forced the tech giant to adjust some business practices.

After the Android ruling last year, Google for the first time began charging handset makers to pre-install Gmail, Google Maps and other popular applications for Android devices in the European Union.

Perhaps in an attempt to head off additional inquiries, Google announced a number of further changes to services across Europe on Wednesday, after rivals complained that it continued to benefit from anticompetitive business practices.

For the first time, the company said, it will ask Android phone users in Europe if they want to switch to a web browser and search engine not owned by Google. To allow more competition when customers shop with Google, it will give other shopping sites more prominence in its search results, the company also said. Google said it would do the same with local search queries in Europe, such as when a person searches for a restaurant, a move that could help companies like TripAdvisor and OpenTable.

Outside of its review of practices by Google and others, the European Union has adopted tough new privacy rules that many countries outside Europe now view as a template. Regulators here have also investigated tech companies’ tax practices and called for more scrutiny of artificial intelligence.

The decision on Wednesday against Google will be one of the final major antitrust rulings in the five-year term of Ms. Vestager, whose crackdown on Silicon Valley while competition commissioner has made her a minor celebrity in the often-staid world of European politics.

Ms. Vestager has expressed openness to serving another term as the bloc’s top antitrust watchdog, but she is also considered a contender to become president of the European Commission, the most powerful executive position in the European Union. Her future will depend in part on the outcome of European parliamentary elections in May.

Even with her possible departure, pressure on the technology industry is not easing.

The European Union is expected to adopt new copyright regulations as early as next week that would impose restrictions to stop unlicensed content, like music and videos, from being shared on tech platforms like Google and Facebook. Another proposal tries to block the sharing of hate speech and extremist content, a policy that some critics say could lead to censorship.

At the same time, regulators across Europe are pursuing several lines of inquiry.

Ms. Vestager’s office announced last year that Amazon was under investigation for its treatment of independent sellers who use its website to reach customers.

Apple, which in 2016 was ordered to pay Ireland $14.5 billion in back taxes, is now under scrutiny for its App Store policies. Facebook is facing separate inquiries related to its business practices and handling of user data. Google’s advertising practices are also being monitored by privacy advocates who are urging regulators to begin a new investigation for violating privacy rights.

“Businesses and consumers, they depend on platforms to get the best out of digitization,” Ms. Vestager said. “Illegal behavior in these cases is a very serious affair.”

Correction: 

An earlier version of this article misstated the year when Apple was ordered to pay $14.5 billion in back taxes to Ireland. That ruling was in 2016, not 2017.

Google fined a record $5 billion by the EU for Android antitrust violations

theverge

Google required to stop ‘illegally tying’ Chrome and search apps to Android

Illustration by Alex Castro / The Verge

Google has been hit with a record-breaking €4.3 billion ($5 billion) fine by EU regulators for breaking antitrust laws. The European Commission says Google has abused its Android market dominance in three key areas. Google has been bundling its search engine and Chrome apps into the operating system. Google has also blocked phone makers from creating devices that run forked versions of Android, and it “made payments to certain large manufacturers and mobile network operators” to exclusively bundle the Google search app on handsets.

The European Commission now wants Google to bring its “illegal conduct to an end in an effective manner within 90 days of the decision.” That means Google will need to stop forcing manufacturers to preinstall Chrome and Google search in order to offer the Google Play Store on handsets. Google will also need to stop preventing phone makers from using forked versions of Android, as the commission says Google “did not provide any credible evidence that Android forks would be affected by technical failures or fail to support apps.” Google’s illegal payments for app bundling ceased in 2014 after the EU started to look into the issue.

Margrethe Vestager

@vestager

Fine of €4,34 bn to @Google for 3 types of illegal restrictions on the use of Android. In this way it has cemented the dominance of its search engine. Denying rivals a chance to innovate and compete on the merits. It’s illegal under EU antitrust rules. @Google now has to stop it

Google now says it will appeal the decision. “Android has created more choice for everyone, not less. A vibrant ecosystem, rapid innovation, and lower prices are classic hallmarks of robust competition,” says a Google spokesperson in a statement to The Verge. “We will appeal the Commission’s decision.” Google is also warning that the EU’s decision may affect the free business model of Android in the future.

The European Commission has been investigating Android more closely over the past year after rivals complained that Google has been abusing its market dominance in software that runs on smartphones. FairSearch originally filed a complaint against Google back in 2013, and the group included competitors like Nokia, Microsoft, and Oracle. Former Microsoft CEO Steve Ballmer also called Google a “monopoly” at the time, one that authorities should control. While Google and Microsoft ended their Android patent disagreements a few years ago, that hasn’t stopped the EU from investigating the original allegations.

The $5 billion fine dwarfs Google’s previous $2.7 billion record-breaking fine from the EU last year over manipulated search results. Google is still appealing that particular judgment in a back-and-forth that’s expected to last years. FacebookIntel, and Microsoft have all faced significant anti-competition fines from the European Commission. Microsoft was famously fined twice by the EU after the software maker failed to include a browser ballot in a Windows 7 update. Apple was also ordered to pay back $15.4 billion in taxes to the European Union.

EU ANTITRUST TECH FINES

Ranking Company Year Amount
1 Google 2018 €4.34 billion
2 Google 2017 €2.42 billion
3 Intel 2009 €1.06 billion
4 Microsoft 2008 €899 million
5 Microsoft 2013 €561 million
6 Facebook 2017 €110 million

Android has long been considered open-source software, but Google has slowly been adding key components into its Google Play Services software and associated agreements. Alongside anti-fragmentation agreements to keep manufacturers on Google’s version of Android, most Android handsets (outside of China) now ship with Google’s software and services bundled on them.

The EU has now ordered Google to adhere to its judgment within 90 days and unbundle search and Chrome from its Android offering. With Google appealing the decision, the legal process is likely to run for many years ahead. While many had expected Google to face its own “Microsoft moment,” the EU doesn’t seem to be forcing any strong future oversight on Android or asking Google to modify its software to include a ballot for alternative browsers or search engines.

This decision seems to be more about preventing Google from bundling its services to Android, than forcing the company to change Android significantly. Phone manufacturers will still be free to bundle Chrome and Google search apps if they wish, but they won’t be forced to do so, and they’ll be free to offer devices with forked versions of Android.

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