Google faces an $11 billion EU fine for Android's market dominance

Google could find itself staring down the barrel of yet another fine from the EU, in lieu of the latest antitrust investigation into the company.

This time around, the EU's competition commissioner, Margrethe Vestager, is going after Google for its dominance in the mobile market via Android.

The EU believes that Google has pushed illegal terms onto Android device manufacturers, harming competition and cutting consumer choice. The European Commission believes that, by Google imposing that device makers have to use its search, web browsing and other services as default, it stops consumers from having a choice to use other systems.

Vestager has been gunning for Google since 2016, over the company's claims that Android is open and flexible for all. The competition commissioner believes that by pre-installing Android phones with Google services it's not, in fact, providing the consumer choice it claims to advocate.

It's not known exactly what the final fine against Google will actually be, but the EC is able to fine up to $11 billion (8.17 billion) - 10% of Google parent company Alphabet's global turnover. The Financial Times states that it's rare the EU goes for the full fine and, in the case of Google being fined for anti-competitive tactics with its online shopping service, it received a 2.14 billion fine.

As Android is used in more than 80% of smartphones on the market right now, the ruling could have a big impact on Google's business model of Android providing a gateway into its services for people. It's possible that such a ruling could change how Google operates in the EU, and that may not actually be a great thing for consumers.

In the case of Google's shopping-related services, for example, it was previously ruled that Google was unfairly directing shoppers away from other stores and towards Google-favoured retailers and sellers. Following the EU ruling, Google has made changes to its Shopping system - stripping out ratings and price guidance for goods and no longer offering lower prices for goods sold via trusted sellers. The European Commission is reviewing the changes to see if they're satisfactory or not.

Google has hit back in the past about the EU's claims around Android's setup in Europe. In a blog post from 2016, Kent Walker, Google's general counsel, explained that the company believes "that our business model keeps manufacturers' costs low and their flexibility high while giving consumers unprecedented control of their mobile devices."

While Walker's statements may well be true - it's easy to not use Google Chrome, Google Search or any Google services on an Android phone if you don't want to - the European Commission disagrees. In fact, because Google holds such dominance over rivals with Android, and it makes manufacturers install Google services as default, manufacturers don't have much of a choice but to use Google - restricting what they can offer up.

Apples and oranges

If you're wondering why Google is being targeted for Android, but Apple isn't in hot water for iOS, it turns out it's because the EU doesn't see iOS and Android as the same thing. Android is licensed out, iOS is only available on Apple's devices, and thus doesn't fall under the EC's jurisdiction.

"The commission's case is based on the idea that Android doesn't compete with Apple's iOS," said Walker. "We don't see it that way. We don't think Apple does either. Or phone makers. Or developers. Or users."

Because Google operates an open model that allows anyone to download and use Android, it allows users to break away from the likes of iOS, Blackberry's RIM and other mobile operating systems that run in a closed environment. It's arguable that many consumers use Android devices because they want to be using Google services - likely because they're already using them elsewhere and it makes more sense to use them everywhere than juggle multiple services for one task across various platforms. By restricting access to these services, the EC runs the risk of actually making things harder for consumers, rather than easier.

Google argues that the only reason it places controls on what developers can do is to ensure that Android actually works smoothly on a wide variety of phones and tablets. If a user doesn't want to be using Google's services, it's very easy to download an alternative.

The European Commission's stance against Google Shopping could easily be argued as being within consumers' interests, but this latest case against the company nevertheless smacks of the EC throwing its weight around. According to Politico, its sources report that the EC will reach a decision next month.