EU court largely confirms Commission’s record fine against Google in landmark case

This article was updated with a comment from Tommaso Valletti.

The European Commission scored a major victory in court on Wednesday (14 September) as Europe’s largest ever competition sanction was upheld against Google with only a slight reduction.

The initial sanction, set at €4.34 billion, was trimmed to €4.125 billion by the EU General Court, a mere 4% reduction. Therefore, the EU judges backed most of the regulator’s grievances against Google for unlawfully restricting competition via its mobile operating system Android.

A Commission spokesperson told EURACTIV that the EU executive “takes note of today’s judgment by the General Court” and “will carefully study the judgment and decide on possible next steps.”

The European Commission and its competition chief Margrethe Vestager scored a much-needed victory after several of their high-profile cases against tech companies such as Intel and Qualcomm were recently dismissed in court.

“Google imposed its will on phone manufacturers that effectively made it impossible to compete in search and other services. We need to give competition a chance in digital platforms, as this brings choice and many more benefits both to consumers and to advertisers,” said Tommaso Valletti, the former Commission’s chief competition economist who followed the case.

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The European General Court has ruled to dismiss a €1 billion antitrust fine filed by the Commission against American chipmaker Qualcomm, marking another major defeat for the EU antitrust regulator.

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The Commission started investigating Android in 2015, following several complaints regarding Google’s business practices. The EU executive found these allegations grounded, issuing a decision in 2018 that fined Google for abusing its dominant position to block competitors in the mobile market.

According to the EU antitrust regulator, Google had imposed anticompetitive contractual restrictions on manufacturers of mobile devices and on mobile network operators since 2011. These restrictions related to three different sets of contracts that the tech giant used to promote its own services.

Via ‘distribution agreements’, Google required that mobile device manufacturers pre-installed its search engine and its web browser Chrome to be able to use its app store Play store.

With ‘anti-fragmentation agreements’, Google ensured that smartphone producers could not use a version of Android other than the official one, otherwise, they would lose the operating license for the pre-installation of Google Search and the Play Store apps.

Finally, Google committed to ‘revenue share agreements’ that gave a stake of its advertising income to smartphone manufacturers and mobile network operators on the condition that they would not pre-install competing search engines on some of their devices.

The EU court mostly confirmed the Commission’s finding, dismissing only the part on the revenue share agreements. In other words, the competition authority did not manage to prove that such exclusivity agreements were abusive, a shortcoming already seen in other tech cases such as those of Intel and Qualcomm.

“We are disappointed that the Court did not annul the decision in full. Android has created more choice for everyone, not less, and supports thousands of successful businesses in Europe and around the world,” a Google spokesperson told EURACTIV, referring to a blog post by the company’s CEO, Sundar Pichai.

For Nicolas Petit, a competition professor at the European University Institute, the ruling supports the approach the Commission has taken in the Digital Markets Act, a regulation that will introduce a set of ex-ante rules for the largest tech companies to open up competition in the internet economy.

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“Now, it, however, remains a judgment ‘hors sol’, to the extent that the European Commission challenged the conduct of Google by strict application of case law without giving much credence to industry context and business history. The idea that Google was the new entrant in a field dominated by Apple is given short shrift,” Petit told EURACTIV.

Google can appeal against the ruling but did not decide on the next steps by the time of the publication.

[Edited by Nathalie Weatherald]

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