Google has lost its recent battle with European Union regulators. This morning the EU Court of Justice upheld Google’s record fine for bundling Google Search and Chrome with Android. The original judgment was issued in July 2018 with an attached fine of €4.34 billion, and although that number has been reduced to €4.125 billion ($4.13 billion), it’s still the EU’s highest fine ever .
The EU criticizes the way Google licenses Android and related Google apps like the Play Store to manufacturers. The Play Store and Google Play services are needed to build a competitive smartphone, but getting them from Google requires signing a series of deals that the EU says are stifling competition.
The Commission focused on three unlawful restrictions. First, Google bundles Google Chrome and Search with Android. The company requires Android manufacturers to sign a Mobile Application Distribution Agreement (MADA) contract, which states that manufacturers who want to include a Google product must include a large collection of them and make Google the standard. There are even requirements for where to place icons and widgets.
The second unlawful restriction is the contract’s “anti-fragmentation agreement,” which states that anyone who forks Android, even as a separate product or under a different brand, will have their company’s Google app license immediately revoked. The third problem concerns Google’s revenue sharing agreements, which give manufacturers who abide by all of these rules a share of the Google search and Google advertising revenue that a customer generates.
The European Commission stated that “the aim of all these restrictions was to protect and strengthen Google’s dominant position in relation to general search services and thereby the revenues generated by Google from search advertising”.
While the appeal has only just been thrown out, Google’s solutions to its problems were already in place around the time of the original verdict. In the EU, Google took a page out of Microsoft’s antitrust compliance book, and Android now shows browser and search engine ballots that allow users to choose a non-Google option. Google says it used advertising revenue from standard Google apps to fund Android development, and now that those apps don’t need to be included, makers can pay for Android directly instead of getting it for free. If manufacturers don’t bundle Google’s apps, Google will charge up to $40 per phone in the EU. The EU also forced Google to allow partners to build Android forks without expecting retaliation from the company. You can now sell Google Play Android and an Android-based fork device side-by-side without being kicked out of the ecosystem.
In response to the ruling, a Google spokesperson told Ars: “We are disappointed that the court did not overturn the decision in full. Android has created more choice for everyone, not less, and powers thousands of successful businesses in Europe and around the world.”
This is Google’s second major loss in the EU courts. The company was also fined €2.4 billion for bundling Google Shopping with search and €1.5 billion for bundling search and advertising. Overall, Google was fined 8.25 billion euros in the EU.