Alphabet Inc Class A (NASDAQ:GOOGL) faces a possibility of being hit with a record fine by the European Union. This is after allegations that the tech company has been using its Android smartphone platform to defend its search engine.
Margrethe Vestager, who is the competition chief of the European Union is said to have been investigating Google for the last three years. The probe began after several complaints were lodged accusing the company of forcing the makers of smartphones to install its apps on their devices.
According to the Telegraph, the move is a sure recipe to heighten the war between Brussels and the Silicon Valley. The search giant was found guilty of monopoly abuse last year. As a result, it was forced to pay 2.1 billion pounds as the penalty. However, speculation is high that this time, the fine is expected to marginally exceed what the company paid last year. The fine is expected to be handed down in the next one or two days.
It is alleged that the smartphone manufacturers are given Google’s Android software for free. However, they are tied to exclusivity agreements that impose the manufacturers to install Google’s search engine together with the web browser in case they use the company’s Play app store.
This has not gone down well with Google’s competitors who have since stated that the company is abusing its majority share of the European smartphone market. This is detrimental to the competing browsers and search engine companies. Android boasts of a 74% share of the said market.
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Google has since defended itself by stating that the agreements ensure that Android is free to the smartphone makers whilst aiding the search giant to remain competitive against Apple.
Google risks being potentially fined 8.4 billion pounds or a whopping 10% of its mother firm, Alphabet’s turnover.
Even though it is highly unlikely for the company to be penalized the maximum limit, it is very likely that it will be fined more than the 2.1 billion pounds it paid in 2017.
In coming days, Android phones may be sold without a pre-installed Google software. It is expected that the search giant will be ordered to cease its agreements with smartphone makers.