Alphabet unit Google on Monday criticised EU antitrust regulators for ignoring rival Apple as it launched a bid to get Europe’s second-highest court to annul a record 4.34-billion euro ($5.1 billion) fine related to its Android operating system.
The company is fighting a 2018 decision from the EU’s executive Commission, the bloc’s top antitrust enforcer.
The European Commission fined Google in 2018, saying that it had used Android since 2011 to thwart rivals and cement its dominance in general internet search.
Far from holding back rivals and harming users, Android has been a massive success story of competition at work, representatives of Google told a panel of five judges at the General Court in Luxembourg at the start of a five-day hearing.
“The Commission shut its eyes to the real competitive dynamic in this industry, that between Apple and Android,” Google’s lawyer Matthew Pickford told the court.
“By defining markets too narrowly and downplaying the potent constraint imposed by the highly powerful Apple, the Commission has mistakenly found Google to be dominant in mobile operating systems and app stores, when it was in fact a vigorous market disrupter,” he said.
Pickford said Android “is an exceptional success story of the power of competition in action”.
It’s one of three antitrust penalties totaling more than $8 billion that the commission hit Google with between 2017 and 2019. The others focused on shopping and search, and the California company is appealing all three. While the penalties involved huge sums, critics point out that Google can easily afford them and that the fines haven’t done much to widen competition.
In its original decision, the commission said Google’s practices restrict competition and reduce choices for consumers.
Google, however, plans to argue that free and open source Android has led to lower-priced phones and spurred competition with its chief rival, Apple.
Commission lawyer Nicholas Khan dismissed Apple’s role because of its small market share compared with Android.
“Bringing Apple into the picture doesn’t change things very much. Google and Apple pursue different models,” he told the court.
“Google’s conduct denied any opportunity for competition,” he said, citing agreements which forced phone manufacturers to pre-install Google Search, the Chrome browser and the Google Play app store on their Android devices, and payments to pre-install only Google Search.
“Android has created more choice for everyone, not less, and supports thousands of successful businesses in Europe and around the world. This case isn’t supported by the facts or the law,” the company said as the five-day hearing opened at the European Court of Justice’s General Court.
Android, free for device makers to use, is found on about 80% of the world’s smartphones. The case is the most important of the European Union’s three cases against Google because of Android’s market power. Google has racked up more than 8 billion euros in EU antitrust fines in the last decade.
German phone maker Gigaset Communications GmbH, which is backing Google, said its success was due to Android’s open platform and lamented the negative impact of the Commission’s decision on its business.
“The licence fee for the Play Store that Google now charges as a result of the contested decision represents a significant portion of the price of Gigaset’s smartphones aimed at price-sensitive consumers,” its lawyer Jean-François Bellis told the court.
Lobbying group FairSearch, whose complaint triggered the Commission case, was however scathing about Google’s tactics with phone makers.
“Google adopted a classic bait and switch strategy. It hooked (them) on a supposedly free and open source operating system subsidised by its search monopoly, only to shut that system to competition through the web of restrictions at issue in this case,” its lawyer Thomas Vinje told the court.
A verdict may come next year. The case is T-604/18 Google vs European Commission.
