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EU hits Google with record $5 billion fine over Android antitrust practices

Big changes to Android could be on the way. Meanwhile, President Trump offers his opinion.

Mobile Device Applications for Android

Android is the most popular mobile operating system in the world.

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The European Commission slapped Google with a record fine of 4.34 billion euros ($5 billion) on Wednesday over antitrust violations related to the Android mobile operating system.

The European Union is concerned that Google's agreements with phone makers such as Huawei, Samsung and LG put those companies at a disadvantage because they're completely dependent on Android. The agreements stipulate that certain Google apps and search tools, as well as the Google Play Store, must be preinstalled on Android devices, which allows Google to preserve and strengthen its dominance in search.

Most of all, the EU is worried that this harms you, the consumer, by restricting your choice and preventing innovation that could lead to better mobile experiences in the future.

Now playing: Watch this: Why Google got slapped with a $5B fine by the EU
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"Google has used Android as a vehicle to cement the dominance of its search engine," Margrethe Vestager, the EU's competition commissioner, said Wednesday in a statement. "These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules."

Google will appeal the decision, Google CEO Sundar Pichai said in a blog post. Pichai defended Android against the EU's antitrust charge. 

"Rapid innovation, wide choice, and falling prices are classic hallmarks of robust competition and Android has enabled all of them," he said.     

The EU's decision also ignores the competition from Apple's iOS mobile operating system and "misses just how much choice Android provides," he added. 

"Today, because of Android," Pichai said, "there are more than 24,000 devices, at every price point, from more than 1,300 different brands."

Donald Trump versus the EU

On Thursday, President Donald Trump weighed in on the fine, pulling Google into his criticism of the EU.

"I told you so! The European Union just slapped a Five Billion Dollar fine on one of our great companies, Google. They truly have taken advantage of the U.S., but not for long!" he tweeted.

Less than a week ago, Trump called the EU one of America's economic adversaries. "I think the European Union is a foe, what they do to us in trade," he told CBS News

This is the second such fine the EU has imposed on the tech giant in just over a year, and it could mean big changes to the world's most popular mobile platform. The punishment comes amid wider scrutiny over the power that tech giants like Google and Facebook wield over our lives. 

Google argues that by providing Android software free of charge to device makers it's enabled the proliferation of cheap phones and, in doing so, has increased access to online services. The company also points out that if users want to download rival services they are free to do so.

The EU's investigation into Android dominance dates back to 2016. In June 2017, it fined Google $2.7 billion over abusing the way it prioritizes its own shopping results in search. Wednesday's fine brings the total to $7.2 billion over 13 months.

What the EU action could mean for Google

But the impact of the EU's decision to fine Google over Android's dominance could be more than just monetary. Google could be forced to open up Android, which might translate into not requiring manufacturers to preinstall Google services including Chrome, YouTube and Google Maps.

For phone owners within Europe, this could mean that a new phone may come with fewer services preinstalled, or could come with the manufacturer's own choice of apps and services rather than the typical Google options. For Google, which benefits financially when more people use its services, this could ultimately hurt mobile ad revenue.

In a press conference Wednesday, Vestager said she hopes the decision will allow more rival businesses, apps and services to flourish, providing more choice for consumers overall.

Reactions from rivals and watchdog groups came quickly.

"The US Federal Trade Commission or Department of Justice should also act to end Google's monopolistic abuses, instead of letting the Europeans be the only cop on the antitrust beat," John Simpson, privacy project director at the nonprofit Consumer Watchdog, said in a statement.

Yelp, which earlier this year filed an antitrust complaint in the EU against Google over alleged abuse of its dominance, also supported the EU's decision.

"The European Commission's ruling of additional illegal conduct by Google on smartphones is another important step in restoring competition, innovation and consumer welfare in the digital economy," Luther Lowe, Yelp's senior vice president of public policy, said in a statement. He called on the US to provide consumers with similar protections.

Not everyone is so upbeat about the impact of the decision that came from the European Commission, which is the executive arm of the EU. Europe's action is six to eight years too late, Geoff Blaber, tech analyst at research firm CCS Insight, said in a blog post. At this point, he added, unbundling Google apps that users rely on just means they'll have to seek them out and download them. He also expressed concern that the already known issue of fragmentation of Android could worsen, resulting in inconsistent app performance and a poorer user experience for consumers.

"Google's strength is an understandable concern, but overly arbitrary measures could ultimately hurt the consumer and only strengthen the position of a primary competitor in Apple," he said.

First published, July 18 at 2:39 a.m. PT.
Update, 6:42 a.m. PT: Adds comments from Google CEO Sundar Pichai.
Update, July 19 at 6:28 a.m. PT: Adds President Trump's tweet.

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