The EU Takes The Sledgehammer To Google
Overnight the EU announced it was levying a $5B (with a B) fine against Google for predatory business practices involving its Android operating system. The basis for the violation is that Google preinstalls its own apps and uses its own search engine as the default on Android-based handsets, to effectively control the entire user ecosystem. Even for cash rich Google $5B is a significant amount, representing 40% of their profit in 2017.
In the US the idea of handset makers preinstalling their own products is fairly common. Apple invented the play and still does it to this day. But the market here is a little more balanced between iOS (Apple) phones and the combined number of Android phones out there. So consumers are making a choice about which ecosystem they want to be in, among two fairly equal competitors. But as you can see in the graphic below, the Android operating system dominates worldwide handset sales with over an 85% market share. So everywhere besides the US it’s an Android world or nothing. Hence the $5B fine.
The rest of Silicon Valley should pay attention to this one. A fine of this size is a signal that the EU is taking a much more proactive role to protect its citizens from American tech domination. With a fresh new set of GDPR laws on the books, I could see many more fines coming down the line.