The European Union recently fined Google a staggering $5 billion in an Android antitrust case. Reports now suggest the search giant could have saved itself that mammoth fine if it had moved faster in its negotiations with the EU.
Was Google late, or was settlement never an option?
Bloomberg reports that Google did try to settle with the European Union in August 2017 by offering to make changes to its Android policies. The offer was made shortly after receiving a then-record €2.4 billion ($2.7 billion) antitrust penalty in a separate case involving its product search practices.
Though details on Google’s offer are missing, according to Bloomberg, the U.S. firm did offer to “loosen restrictions” in Android contracts and considered distributing its apps in “two different ways.” Google’s offer seems convincing, but the EU went ahead with the fine anyway. One official reportedly told Bloomberg that Google’s offer wasn’t accepted because settlement was “no longer an option” and it was “too little too late.”
After the EU announced the fine last year, EU Commissioner Margrethe Vestager did indicate that she was open to settlements on the cases that were still open.
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At a press event announcing the fine, she said, “Each case is separate… Obviously I have taken no conclusions in the cases that are still open.”
Google lawyers reportedly then drafted a letter in August explaining how the company is planning to address the latest EU concerns. The letter was not a detailed map of how the search engine giant looks to achieve what it promised the EU, but rather, just an outline. However, the lawyers did not receive any formal response to their letter, according to Bloomberg. Instead, officials reportedly suggested that settlement was no longer an option.
Android antitrust case: why Google?
Google has been a favorite target of the EU when it comes to antitrust cases. The company has faced three probes, negative press and consistent demand from smaller rivals and customers demanding action. The search giant is now facing a total fine of €6.7 billion, with the threat of more to come in the future.
Without commenting on their settlement attempts, Google CEO Sundar Pichai said in a recent blog post that the company would appeal the EU decision, as they have “shown that we’re willing to make changes.”
It’s easy to understand why the Mountain View, Calif.-based company attempted to settle the Android antitrust case. The search engine giant offers its Android operating system free to mobile phone makers, but it compels them to preinstall Google apps if they want access to the Play app store. Google also pays phone manufacturers, telecom carriers and browsers to run its search engine, which collects user data.
With the help of such data, the search giant has succeeded in capturing almost $50 billion in yearly mobile ad markets, or one-third of the global market, according to the research firm Emarketer.
“In this way, Google has used Android as a vehicle to cement the dominance of its search engine,” EU Competition Commissioner Margrethe Vestager said 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.”
Here’s what the EU fine means
After the EU slapped Google with a record fine in the Android antitrust case, U.S. President Donald Trump attacked the EU with a tweet: “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!”
Trump’s reaction could be seen as an extension of the boiling trade war between the U.S. and other nations. Senator Orrin Hatch, a Utah Republican who also chairs the Senate Finance Committee, also criticized the EU for taking extreme steps against Google.
Hatch stated that the EU has a history of engaging in regulatory, tax and competition actions and proposals against U.S. tech companies. Hatch even questioned the EU’s intentions as he pondered whether these actions are “anything more than a series of discriminatory revenue grabs.”
Meanwhile, analysts believe if the decision to fine Google in the Android antitrust case stands, it will affect the company’s products, but not its profits in the region. Raymond James analyst Aaron Kessler said in a recent note to clients that a potential solution could include unbundling default apps in the EU and giving free rein to mobile operators and device makers to decide which apps to preinstall.
“While this could lead to lower Google search revenues in Europe, we believe losses would be minimal as Google has 90%-plus Europe search share,” the analyst said, according to MarketWatch.