The EU opened a new front against Google on Wednesday, slapping the US giant with anti-trust charges alleging it had abused the dominance of its Android mobile phone operating system.
The charges are a massive blow to one of the Google’s most strategic businesses and could alter a global smartphone sector that is fast taking over traditional PCs as the biggest segment in the world of computing.
Competition Commissioner Margrethe Vestager said Silicon Valley giant Google had used practices such as making manufacturers pre-install its market-leading search engine as the default in phones.
“The preliminary conclusions from our investigations is that these practices breach EU competition law,” Vestager, a former Danish economy minister, told a press conference.
She said Brussels believed that “Google has abused its dominant position”, adding: “We have found that Google pursues an overall strategy on mobile devices to protect and expand its dominant position in Internet search.”
The case is the second attack by the EU against Google after Vestager last year formally charged the company for abusing its dominance of the search engine market in Europe.
Taking both EU cases against Google together, the company risks a fine of 10 percent of worldwide global sales for one year, which would amount to a $7.4 billion fine on the basis of 2015 revenues.
In its latest charge sheet, the EU accused Google of obstructing innovation by giving unfair prominence to its own apps, especially its search engine, in deals with mobile manufacturers such as Samsung or Huawei.
The company is also accused of restricting manufacturers from installing rival operating systems based on Android on their phones.
– Difference with US? –
Google now has a chance to answer the charges, either by fighting them comprehensively and risking a huge fine or proposing remedies to satisfy Brussels.
Google said it would work with the EU to show that consumers benefitted from Android.
“Android has helped foster a remarkable — and, importantly, sustainable — ecosystem, based on open-source software and open innovation,” Kent Walker, Senior Vice President and General Counsel of Google, said in a statement.
“We look forward to working with the European Commission to demonstrate that Android is good for competition and good for consumers.”
The case against Android resembles one against Microsoft in which the EU in 2013 fined the software giant 561 million euros ($634 million) for failing to offer users a choice of web browser on its Windows operating system.
The Android operating system captures about 80 percent of the world market for mobile phones, far ahead of its closest rival Apple.
The EU’s tough line comes despite the fact that Canada on Tuesday closed its own investigation into allegations Google abused its dominance in online search advertising, following in the tracks of the US.
Vestager rejected suggestions questions that Brussels was unfairly targeting US companies in her competition cases, with Apple, Amazon and McDonald’s also in the EU’s crosshairs.
“If dominance is abuse then we have an issue… that has been the task no matter the flag of the company or the ownership,” Vestager said.
US-based INTEL, the world’s biggest chipmaker, was in May 2009 fined 1.06 billion euros, the EU’s biggest fine ever.