The EU just slapped Google with a staggering $5 billion antitrust fine

Legal regulators in the European Union just hit Google with a record €4.34-billion, or $6.7 billion CAD antitrust fine on Wednesday for using its Android operating system in a way that prevents competitors from competing with the company. Though the fine barely puts a dent in its cash reserves totalling more than $102.8 billion, it could hinder relations between the EU and Washington.

Google has announced it will appeal the fine, stating that “Android has created more choice for everyone, not less. A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition."

The Commission President of the EU antitrust body is set to meet with US President Donald Trump in the White House this week to talk about trade tariffs, specifically on EU-produced vehicles.

Commissioner Margrethe Vestager, who is in charge of the case, ordered Google to stop all anticompetitive practices and deals with smartphone makers within 90 days, or face additional penalties of up to 5 percent of the company's daily worldwide turnover.

"In this way, 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 the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere," she said.

Specifically, the case is concerned that Google requires manufactures to preinstall the Search app and Chrome to gain access to the Play Store, has made payments to manufactures and networks to be exclusively preinstalled on devices, and that the company prevents manufactures from selling devices with customized interfaces (better known as "forks") without prior approval.

1Google2018€4.34 billion
2Google2017€2.42 billion
3Intel2009€1.06 billion
4Microsoft2008€899 million
5Microsoft2013€561 million
6Facebook2017€110 million

The EU's report says this is different than iOS or BlackBerry OS because those are both exclusive operating systems which aren't licensed by third-party device manufactures. Essentially because Apple builds its own phones, tablets and laptops, it can't be faulted for prioritizing its own software. On the other hand, Google makes Android available to others and in doing so, pushes its products in front of more people, which is why it's on the hook here.

This is bad news for Google because this case puts it on a collision course with Android P, the upcoming version of its operating system that will be released to the public soon.

However, Google CEO Sundar Pichai took to his company's official blog to respond to the ruling, disagreeing with the findings of the EU and making the point that users can, at any point, install, delete and modify apps on their device.

"Today, because of Android, a typical phone comes preloaded with as many as 40 apps from multiple developers, not just the company you bought the phone from. If you prefer other apps—or browsers, or search engines—to the preloaded ones, you can easily disable or delete them, and choose other apps instead, including apps made by some of the 1.6 million Europeans who make a living as app developers."

The legal process for something like this is likely to run on for years, but the EU luckily doesn't appear to be forcing any overreaching oversight onto Android or asking for the software to be modified as extensively as it could be. Rather than bundling its services with Android, the EU wants Google to allow manufacturers to choose which browser and search apps they want to bundle on their phones.