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Table of Contents
FAIR COMPETITION
•The European Union regulators have slapped Alphabet-owned Google with a record 4.34 billion euro ($5 billion) antitrust fine for abusing the dominance of its Android mobile operating
WHY THE EU IS UPSET WITH GOOGLE
• One, asking device manufacturers to preload the Google Search app and Chrome browser as a condition for licensing Google’s Play Store. As a result, Google Search and Chrome were installed on practically all Android devices sold. “Pre-installation can create a status quo bias… (There is) evidence that the Google Search app is consistently used more on Android devices, where it is pre-installed, than on Windows Mobile devices, where users must download it.
• This also shows that users do not download competing apps in numbers that can offset the significant commercial advantage derived through pre-installation,
NOTES
• Two, the Commission has said that Google “granted significant financial incentives to some of the largest device manufacturers as well as mobile network operators on condition that they exclusively pre-installed Google Search across their entire portfolio of Android devices”.
• This significantly reduced their incentives to pre-install rival search apps. However, it said that by 2014, Google had stopped the practice.
NOTES
• Google has also blocked phone makers from creating devices that run forked versions of Android
• Android being an open-source operating system, it has its code published by Google online whenever a new version is released. Based on this source code, developers create their own versions, many of which do not get approval from Google. “Google’s conduct prevented a number of large manufacturers from developing and selling devices based on Amazon’s Android fork called ‘Fire OS’,”
EUROPEAN UNION
• The $5 billion fine dwarfs Google’s previous $2.7 billion record-breaking fine from the EU last year over manipulated search results. Google is still appealing that particular judgment in a back-and-forth that’s expected to last years.
• Facebook, Intel, and Microsoft have all faced significant anti-competition fines from the European Commission. Microsoft was famously fined twice by the EU after the software maker failed to include a browser ballot in a Windows 7 update.
• Apple was also ordered to pay back $15.4 billion in taxes to the European Union.
WHY A $5 BILLION FINE WON’T HANDICAP GOOGLE
• For most companies, a $5 billion fine would be devastating, if not fatal. But Google is not most companies. GOOG stock hardly budged, falling a mere 0.3 percent on the news.
• Google made $26 billion profit last year
• Finally, GOOG has a very strong, but potentially ugly, card left to play. Namely, it could do something entirely within its rights and start charging manufacturers a licensing fee for each device using the Android operating system.
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