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European Union slaps Google with $5 billion fine; largest ever issued to the search engine giant

The European Union hit Google with a $5 billion antitrust fine for abusing dominance of its Android OS. (Getty Images)

The European Union has ruled that Google violated antitrust laws and smacked the Alphabet-owned giant with a €4.34 billion ($5 billion) fine, according to a press release published Wednesday. It's the largest fine ever imposed on Google by the EU.

The European Commission, the EU's executive body, said Google used its Android operating system to improperly funnel traffic to its search engine, denied rivals a chance to "innovate and compete on the merits," and denied consumers the "benefits of effective competition" in the mobile marketplace. Last year, the internet company was fined $2.7 billion for favoring its shopping service over its competitors, CNBC reported.

"Since 2011, Google has imposed illegal restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet search," the European Commission wrote in a press release Wednesday.

The company has 90 days to stop its illegal practices or face additional penalties of up to 5 percent of the average daily worldwide turnover, according to the release.

Google, which purchased Android in 2005, has denied any wrongdoing and plans to appeal the EU's ruling.

What did the EC say?

Commissioner Margrethe Vestager, in charge of competition policy, said the case focused on three types of restrictions that Google imposed on Android device manufacturers and operators.

1. Google illegally tied Google search and browser apps to device manufacturers.

2. Google made payments to certain large manufacturers and mobile network operators on the condition that they exclusively pre-installed the Google Search app on their devices.

3. Google prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android, known as "Android forks," that were not approved by Google.

The EC noted that dominance in the market is not an EU antitrust violation; however, "dominant companies have a special responsibility not to abuse their powerful market position by restricting competition, either in the market where they are dominant or in separate markets."

What did Google say?

Google CEO Sundar Pichai responded to the EU's decision on Wednesday in a blog post.

"Today, the European Commission issued a competition decision against Android, and its business model. The decision ignores the fact that Android phones compete with iOS phones, something that 89 percent of respondents to the Commission’s own market survey confirmed. It also misses just how much choice Android provides to thousands of phone makers and mobile network operators who build and sell Android devices; to millions of app developers around the world who have built their businesses with Android; and billions of consumers who can now afford and use cutting-edge Android smartphones," Pichai wrote.

What else?

The EC is still investigating a third antitrust case against Google which involves its advertising service known as AdSense. A preliminary conclusion in 2016 showed that the company abused its dominant position on the ability of third-party websites to display search advertisements.

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