BRUSSELS – Google was fined $ 5.1 billion by European antitrust regulators on Wednesday for abusing its power in the smartphone market to stifle the clout of American technology companies.
The fine of 4.34 billion euros were a record and far greater than the 2.4 billion euros or about 2.8 billion dollars that the European Union gave Google last year for unfairly favoring its own services on Internet search results had raised. Wednesday's decision highlighted that European authorities are aggressively pushing for greater regulation of the digital economy in areas such as antitrust, privacy, taxation and the dissemination of misinformation and hate speech.
"Google has used Android as a vehicle to cement the dominance of its search engine," said Margrethe Vestager, Europe's antitrust chief. "These practices have deprived rivals of the opportunity to innovate and compete, and have deprived European consumers of the benefits of effective competition in the important mobile sector, which is under EU antitrust rules."
The European Authorities have given Google 90 days to end its practices, or face fines of up to 5 percent of its parent's worldwide average daily sales. However, the case would most likely last for years if Google appealed the decision.
The long-awaited verdict came in a politically sensitive period in which Europe and the United States engaged in an escalating economic conflict by introducing tariffs on a range of products from alcohol to aluminum. Last week, on a trip to Brussels, President Trump maintained his claims that American companies were at a disadvantage here. Jean-Claude Juncker, president of the European Commission, the executive branch of the Union, will visit Washington next week to hold talks with Mr. Trump.
Nonetheless, the ultimate impact of Wednesday's decision may be subdued, considering that Europe has largely alone in its regulatory efforts against Silicon Valley titans. In the United States, legislators and regulators have usually adopted an approach that allowed the influence of large technology companies to grow, although there have been recent signs of changing attitudes and more difficult issues at the congress.
Google's services remain immensely popular with clients, while share prices, profits and sales continue to rise. In the three years that the European Commission conducted its investigation, Alphabet's annual revenues have risen from $ 75 billion to $ 111 billion. Google has also strengthened its market dominance in the mobile phone market, according to IDC, a market research firm, which sold more than 1.25 billion Android phones worldwide last year.
The case highlights the broader regulatory challenge in monitoring the digital economy. By the time the authorities tackle an area that needs review, the market could have evolved.
"In fast-moving markets, competition law matters most," said Jonathan Kanter, partner at law firm Paul Weiss and a former antitrust investigator for the Federal Trade Commission. But "if you have cases that are many years old, fight old ones instead of the next ones."
Google has long portrayed Android as an open-source platform that hardware manufacturers can use and adapt to their needs
But the European Commission said Android was delivered with a fixed string.
The commission said to get access to the latest versions of the operating system, cell phone manufacturers had to agree to Google Search and Chrome to make the default services on Android B. the search engine DuckDuckGo or the browser Firefox.
Antitrust officials added that Google has given handset manufacturers and mobile operators financial incentives to prioritize their services and does not want to sign manufacturers to sell devices with modified versions of Android that do not include Google apps.
In fact, the authorities said Google negotiated conditions that companies in the saturated smartphone market – where profit margins are gossamer – could not refuse.
As Google gained more power in the mobile market, competitors such as Microsoft, Oracle, Nokia, TripAdvisor and African telecommunications giants Naspers complained to the regulators. The group launched an organization called Fair Search, which aggressively voted against Google for a variety of topics, including the dominance of the mobile market and internet search in Brussels. (Microsoft left the group after signing a license agreement with Google.)
Mr. Kanter, the attorney, said that although Google has largely won the battle to embed Android in smartphones, Wednesday's decision could limit the way Google tackled new areas of software, including cars and consumer electronics connected to the Internet] Europe's actions could also affect other countries around the world that are seeing Silicon Valley harder, he said.
"To say that every single European Commission action will stop them is probably naive," he said. "But movements have to start somewhere, and good, strong, persistent, determined actions can have an effect over time."