Record-breaking fine expected this week could put Google’s business model at stake
Record-breaking fine expected this week could put
Google’s business model at stake
By Andy Meek July 16th, 2018 at 4:36 PM
European regulators are expected to hit Google with a
multibillion fine on Tuesday or Wednesday, an announcement that’s being closely
watched not because of the anticipated size of the penalty — Google basically
prints money at this point, so it will be able to easily absorb the blow.
What’s really at stake is whether the EU uses the fine to force changes in the
way the search giant does business.
The penalty coming this week is a product of Google’s
longstanding policy of requiring Android device makers to set Google’s own
search and web browsers as the default offerings. European regulators could
fine Google as much as $11 billion if they wanted to, but while the fine is not
expected to be that high, it is expected to top last year’s $2.72 billion
antitrust penalty against Google for unfairly ranking its comparison-shopping
service over similar offerings from rivals in search results.
The reason this week’s fine will likely surpass that
amount is because the probe that brought regulators to this point was much more
expansive. At issue are the rules Google binds phone makers to if they want to
use the company’s Android operating system, and how far European regulators
might want to go in possibly forcing Google to level the playing field. Making
it easier for smartphone makers, in other words, to choose what apps they want
to pre-install on devices.
In a blog post, Google general counsel Kent Walker
defended the company’s position by explaining that distributing products like
Google Search together with its Google Play app store “permits us to offer our
entire suite for free — as opposed to, for example, charging upfront licensing
fees. This free distribution is an efficient solution for everyone — it lowers
prices for phone makers and consumers, while still letting us sustain our
substantial investment in Android and Play.”
A Reuters report out today, meanwhile, speculates that
anyone hoping regulators use this week as a chance to take Google down a peg
may end up disappointed. Specifically because, well, it’s probably too late at
this point.
The piece quotes Richard Windsor, an analyst at research
company Radio Free Mobile. Google is too entrenched, he explains, a reference
to realities like Android boasting a more than 75 percent market share in four
of Europe’s five biggest regions, according to Kantar Worldpanel.
Which means, Windsor continues, that users in Europe are
now “completely accustomed” to using Google services — and even prefer them.
“Hence, I think separating Google Play from the rest of
Google’s Digital Life services would have very little impact as users would
simply download and install them from the store,” Windsor said.
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