EU's fine on Google

Why in news?

The EU had slapped a record € 4.34-billion ($5.04 billion) antitrust fine on Google.

What is the reason?

• The penalty is for illegally using the Android operating system.
• Google has used Android to strengthen the dominance of its search engine.
• It aimed at ensuring that traffic on Android devices go to its search engine.

How did Google do this?

• Google imposed three types of restrictions on Android device manufacturers and network operators.
• Pre-installation - Manufacturers were asked to preload the Google Search app and Chrome browser.
• This was as a condition for licensing Google’s Play Store.
• Pre-installation of the apps can create a status quo bias among the users.
• Evidently, Google Search app is consistently used more on Android devices.
• However, it is not the case with Windows Mobile devices where users must download it.

• Incentives - Google offered financial incentives to large device manufacturers and network operators.
• The condition was to exclusively pre-install Google Search across their entire portfolio of Android devices.
• This significantly reduced their incentives to pre-install rival search apps.
• However, EU said that by 2014, Google had stopped the practice.
• Tweaked versions - Android is an open-source operating system.
• It has its code published by Google online whenever a new version is released.
• So based on this source code, developers like Android can create their own versions.
• This could be done even without getting approval from Google.
• So Google had not allowed the “forked” versions of Android to pre-install Google’s proprietary apps.
• Google’s measure had thus prevented many manufacturers from developing and selling devices based on these tweaked versions.
• E.g. Amazon’s Android fork called ‘Fire OS’
• EU now insists that Google allow the forked versions of Android.

What are the earlier instances?

• EU - Earlier, the EU fined Google €2.42 billion.
• This was on charges of prioritising its own services on the search platform.
• By this, Google gave itself an advantage over third-party service providers.
• India - The Competition Commission of India had earlier fined Google Rs 136 crore.
• It was slapped for its unfair business practices in the Indian online search market.
• The National Company Law Appellate Tribunal (NCLAT) stayed the ruling on Google’s appeal.
• Nevertheless, NCLAT asked it to pay 10% of the penalty. The tribunal will soon hear the matter.

What are the implications?

• The recent penalty may not financially hurt Google with over $100 billion in cash reserves.
• But it could bring about changes in the way the Android ecosystem functions.
• It would set a precedent for other antitrust cases against Google.

Source: Indian Express