Google hit with $5 billion EU anti-trust fine

Google hit with $5 billion EU anti-trust fine

European Union Competition Commissioner Margrethe Vestager gives a joint press at the EU headquarters in Brussels on Wednesday. AFP

EU regulators hit Google with a record €4.34 billion ($5 billion) antitrust fine on Wednesday for using its Android mobile operating system to squeeze out rivals.

The penalty is nearly double the previous record of €2.4 billion euros which the US tech company was ordered to pay last year over its online shopping search service.

The fine represents just over two weeks of revenue for Google parent Alphabet Inc and would scarcely dent its cash reserves of $102.9 billion. But it could add to a brewing trade war between Brussels and Washington. Google said it would appeal the fine.

European Commissioner for Competition Margrethe Vestager’s boss, Commission President Jean-Claude Juncker, is due to meet US President Donald Trump at the White House next Wednesday in an effort to avert threatened new tariffs on EU cars amid Trump’s complaints over the US trade deficit. Vestager also ordered Google to halt anti-competitive practices in contractual deals with smartphone-makers and telecom providers within 90 days or face additional penalties of up to 5% of parent Alphabet’s average daily worldwide turnover.

“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 in a statement.

The EU enforcer dismissed Google’s argument of competition from Apple, saying the iPhone maker was not a sufficient constraint because of its higher prices and switching costs for users.

Android, which runs about 80 percent of the world’s smartphones according to market research firm Strategy Analytics, is the most important case out of a trio of antitrust cases against Google.

Some Android device makers, including Samsung, Sony and Lenovo did not comment.

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