The EU has taken up arms against Google’s mobile empire in the form of a record-breaking 4.34 billion euro ($5 billion) fine. EU officials issued the fine on claims that Google illegally favored its own apps over those of competitors.
They claim that because Google requires smartphone manufacturers to pre-install and bundle Google Search and Chrome in order to use the Google Play Store, it is abusing its dominance and also stunting competition from rival companies. EU officials have stated that the steep fine was issued to protect European consumers.
In an interview with CNBC, EU Commissioner for competition Margrethe Vestager stated,
“The fine reflects the fact that this has been going on for quite some time. This is a strategy that has been in effect since 2011 and two of the three illegal restrictions are still in effect. It is an ongoing abuse.”
Vestager also stated,
“The thing that Google has to do now is of course to stop,” and “They have products that we all like and like to use. The only thing we don’t like is when they get to misuse their success and put in place illegal restrictions.”
The EU has given Google 90 days to pay up on its antitrust penalties and stop the practice or face further charges of 5% of parent company Alphabet’s daily worldwide revenue. Vestager noted that once Google stops its antitrust infringement, the market will free up.
Google announced today that it is fighting back against the ruling by planning an appeal. In a blog post, Google CEO Sundar Pichai states,
“A healthy, thriving Android ecosystem is in everyone’s interest, and we’ve shown we’re willing to make changes. But we are concerned that today’s decision will upset the careful balance that we have struck with Android, and that it sends a troubling signal in favor of proprietary systems over open platforms.”
Pichai also pointed out that users have the freedom to delete preloaded apps in favor of “apps made by some of the 1.6 million Europeans who make a living as app developers.” He noted that the Commission’s decision ignores user’s freedom of choice and evidence of how people use their phones.
This ruling marks the third antitrust lawsuit laid on Google by the EU. In 2016, Google was accused of blocking rivals on Adsense. As of April, they were advancing on that Adsense case and as of today, it was confirmed that the case is still under investigation.
Last year, the tech giant was also slammed with a $2.7 billion penalty for favoring its shopping service over others.
What This Means for Marketing
This fine not only threatens Google’s dominant position in the mobile sphere, it also threatens their rapidly expanding mobile ad business. In turn, the thousands of marketers who promote ads on Google mobile devices may be negatively affected.
If you account for the shopping service fine issued last year, Google currently faces penalties of over $7 billion. These fines could dramatically increase if the EU decides to hammer down on Google’s Adsense and online ad contract practice.
In a nutshell, this potentially high Adsense penalty is the EU’s defiant way of getting Google to stop blocking search engine rivals on third party sites.
If Google fails to appeal to the EU, then they will lose a huge chunk of mobile ad space territory, a territory that has grown exceedingly large and competitive in recent years.
More and more people are using their smartphones for web browsing, streaming, gameplay, and other internet-based tasks so having acreage in mobile is crucial for Google to maintain their dominance. It’s also crucial for marketers to think seriously about promoting their content via ads on mobile.
It’s unlikely that this ruling will cause Google’s ad empire to topple but there’s a big chance the tech giant could lose their traction in Europe. It’s definitely worthwhile for European marketers to pay attention to these rulings and anticipate some Google ad changes.