“It’s a very serious infringement. It’s a very serious illegal behavior,” Margrethe Vestager, the European commissioner for competition, said in a press conference announcing the decision. But a big question remains: What does the decision mean for Google and other big tech companies? This might be the tip of the iceberg for global technology regulation, for which Europe has been doing the work the United States can’t, or won’t, pursue.
Five billion dollars is a lot of money, even for Google. Alphabet, Google’s parent company, brought in revenue of almost $111 billion in 2017, of which about $32 billion, or 29 percent, came from its Google division. Alphabet’s profit totaled $12.6 billion for the year, making $5 billion amount to 40 percent of its annual net revenue.
Still, the amount is a drop in the bucket when compared to Alphabet’s overall financial picture. While the company also took a $9.9 billion one-time charge related to changes in U.S. tax law, Google’s success is only growing—its net revenues climbed by 20 percent over 2016, and almost that much over the year prior. And like other big tech companies, Google is sitting on huge piles of cash: about $102 billion, of which $62.8 billion is foreign held. That makes the possible $8 billion from the two antitrust fines—Google appealed the first decision, and indicated its intention to appeal the new one, too—more of an inconvenience than an existential crisis. Alphabet’s shares traded only slightly lower following the announcement of the EU fine, suggesting that investors weren’t terribly concerned about the matter, at least for now.
But there are longer-term uncertainties. One is how the decision will affect Google’s business, and what effects that impact might have on the technology industry and the people who use its services. The European Commission’s action would require Google to stop making handset manufacturers bundle its apps and services, and to allow them to sell devices that run on other versions of Android. Given that Alphabet’s revenue still consists primarily of income from Google’s ad businesses, and given that mobile is the the dominant platform for internet users around the world, the loss of those default installations could have an impact on the company’s future success. Even so, the change would only affect new installs, so all the current Android devices—more than 2 billion of them—would continue running as is, with Google’s services in a preferential position. If some of those users move to new devices, they might not switch off Google services.
But the possibility of a variety of new Android platforms could loosen Google’s grip on the mobile market. Google’s CEO, Sundar Pichai, responded to the European Commission’s decision in a blog post titled, “Android has created more choice, not less,” suggesting that he might be most concerned about the erosion of the mobile operating system’s majority. Pichai argued that Android has allowed a diversity of mobile handsets at varying costs and features, but with the common ability to run the same Android software. Of course, this is exactly the matter that the European Commission wants to let flourish even more than Google has made possible. The very homogeneity that Pichai underscored as a consumer benefit has also benefitted Google substantially.