Google breaks the record for fines for violating European competition rules

The original fine of 4.343 billion euros was reduced by the Court to 4.125 billion euros (There is no error in the figures, they are indeed billions!).

The abuses of a dominant position, the subject of Google’s condemnation, lasted, depending on the case, from 2011 or 2012 to July 2018. The Commission had criticized abuses related to the introduction of a clause assimilated to tied selling in Google’s contracts with OEMs (original equipment manufacturer) and MNOs (mobile network operator) regarding the Android operating system for mobile devices.

The Commission had first defined the markets on which there was a dominant position, namely the world market (excluding China) for intelligent mobile operating systems under Android license and online operating shops for the same Android system, then national markets for general research services.

Three types of abuse had been condemned. Each of them consisted of contractual clauses imposed on Google’s co-contractors, all of these clauses creating de facto exclusivity for the benefit of Google and limiting the possibilities of modifying the Android system.

The first abuse consisted of a tied sale of the Google Search application and the Play store since January 1, 2011, then a tied sale of the Google Chrome application to the Play store and Google Search from 2012. The second consisted of submit the licensing for the Play store and Google Search to the acceptance of so-called anti-fragmentation clauses preventing the use of certain versions of Android not controlled by Google. The third made Google’s payment to OEMs and MNOs a revenue share payment conditional on not pre-installing a competing search service on any device within an agreed range.

The General Court validated the Commission’s decision except as regards the revenue-sharing agreement clause, which led it, in the context of its independent assessment of the fine, to reduce, as indicated above, the amount thereof.

It should be noted that the Commission went to the brink of correction because it was accused of having violated the right of access to the file by not having ensured a complete recording of the meetings organized with third parties.

The Court ordered him to do differently in the future but refused to draw any consequences in the present case. This point will surely be discussed again if the decision is appealed.

What consequences can be drawn from this judgment?

First of all, the violation of the rules of competition costs more and more expensive in absolute value.

Abusive behavior for 6 years certainly considered profitable by their perpetrators leads to more than 4 billion euros in fines, result compared to the advantage obtained over this period, what the author of this forum cannot do.

Then, but nothing new, you can pay the consequences of your behavior many years later (beginning of the events in 2011, court decision in 2022, i.e. 11 years later).

There is a good chance that the people responsible for these practices have in the meantime left the company, leaving their successors to bear the consequences.

The Google Android case can be partly compared to the Microsoft Windows case, showing that each time the competition authorities – if they take the time – manage to stop “major” abuses of a dominant position. It confirms the obvious: the fact of being in the digital world does not prevent certain behaviors from being linked to types of abuse already known and sanctioned, such as tied selling.

Now three questions are unanswered:

  • Will Google and Alphabet appeal?
  • Will the “victims” of these abuses, and in particular the OEMs and ORMs, claim compensation for the damage suffered? Such procedures are certainly complicated but increasingly common.
  • Will the entry into force of new texts aimed at controlling the behavior of the major digital operators (DMA and DSA) and preventing abuses added to the limits already imposed by competition law prevent new abusive practices?

Ironically, we can note that fines may bring more money into the European budget than the taxes that we want to impose on digital multinationals to compensate for the fact that they pay little tax in certain EU countries; Obviously the limit of the exercise comes from the fact that it is not the same budgets which receive this money.