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EU Regulator Hits Google with a Record $5 Billion Fine


European Competition Commissioner Margrethe Vestager addresses a news conference on Google in Brussels, Belgium, July 18, 2018.
European Competition Commissioner Margrethe Vestager addresses a news conference on Google in Brussels, Belgium, July 18, 2018.

The European Union's antitrust regulator fined Google a record $5 billion Wednesday for illegally exploiting the powerful market share position of its Android smartphone system.

The EU antitrust regulator concluded that Google, whose Android system operates more than 80-percent of the world's smartphones, abused its dominant position to promote its own apps and services, especially the company's search engine.

The fine represents just over two weeks of revenue for Google's parent company, Alphabet Inc., but it could escalate a brewing trade war between the EU and the U.S. EU antitrust chief Margrethe Vestager denied anti-U.S. bias influenced the decision.

" ...the fact is that this has nothing to do with how I feel. Nothing whatsoever," she said. "Just as enforcing competition law, we do it in the world, but we do not do it in political context."

The regulator ordered Google to end the illegal practices within 90 days or face more penalties. Google said it would appeal the decision.

"Android has created more choice for everyone, not less," the company said. "A vibrant ecosystem, rapid innovation and lower prices are classic hallmarks of robust competition."

The EU's decision to impose the fine was made Wednesday in a meeting in Brussels. The fine was nearly double the then-record fine of nearly $2.8 billion that the U.S. tech giant was ordered to pay last year over its Internet shopping search service.

The ruling comes as EU Commission President Jean-Claude Juncker prepares to meet with U.S. President Donald Trump at the White House next week in an attempt to prevent threatened new tariffs on EU cars.

Despite the EU's record fine, it may not resolve the issue, according to Polar Capital fund manager Ben Rogoff, who has owned Google stock since it's initial public offering.

"The reality is that as long as they're delivering great utility to their consumers, consumers will still use those platforms. If they do, advertisers will be drawn to those platforms, too, because the ROIs [returns on investment] are very difficult to replicate anywhere else."

The lobbying group FairSearch, which filed a complaint with the EU in 2013 that triggered the EU investigation, applauded the decision, saying it could help tighten competition among mobile operating systems and apps.

"This is an important step in disciplining Google's abuse behavior in relation to Android," the group said.