Google facing record $5 billion fine over controversial Android practices

EU slaps Google with record $5 billion fine for antitrust violations

Google will be fined around €4.3 billion (US$5 billion) by the European Union over Android apps on Wednesday, setting a record for antitrust penalties, according to a person familiar with the EU decision.

The fine, which was to be announced about midday on Wednesday, ends an European Union probe into Google's contracts with smartphone manufacturers and telecommunications network operators. The EU is also going after Google's payments to its carrier and Android vendors partners who install Google Search on devices. The EU Commission has fined Google for illegal restrictions on Android smartphone makers and mobile network operators, which helped the company's search engine cement its dominant position further.

In a statement at the time of the verdict, commissioner Margrethe Vestager said: 'Google has come up with many innovative products and services that have made a difference to our lives.

The Commission could have fined Google as much as 10% of the annual global sales of Alphabet, its parent company, which topped $110 billion in 2017.

"Android has created more choice for everyone, not less. A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition", it said.

The Mountain View-based company's high payouts to app developers, coupled with its entrenched relationship with millions of advertisers, has turned Google into the main revenue source for many apps.

European Competition Commissioner Margrethe Vestager addresses a news conference on Google in Brussels, Belgium, July 18, 2018.

The antitrust chief is also expected to order Google to make major changes to Android, which is used on around 80 percent of phones in Europe.

In regards to the record-breaking fine, Vestager said "it's a very serious infringement". Regulators have also alleged that Google sought to prevent manufacturers from using alternatives to its Android operating system.

In 2016, Vestager said: "A competitive mobile internet sector is increasingly important for consumers and businesses in Europe".

The probe targeted contracts that require manufacturers of Android phones to take Google's search and browser apps and other Google services when they want to license the Play app store, which officials say is a "must-have" for new phones.

"We are concerned that today's decision will upset the careful balance that we have struck with Android, and that it sends a troubling signal in favor of proprietary systems over open platforms,"Google CEO Sundar Pichai said in a blog". She said Google also paid big producers to exclusively pre-install the Google Search app.

These practices have denied rivals the chance to innovate and compete on the merits.

The crux of the issue is the monopoly Google has garnered within the Android app marketplace and the advertising advantage this provides the company.

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