Exclusive: EU wants Google to stop anti-competitive Android practices, fine expected

By Foo Yun Chee

EU antitrust regulators plan to order Alphabet's (GOOGL.O) Google to stop paying financial incentives to smartphone makers to pre-install Google Search exclusively on their devices and warned the company of a large fine, an EU document showed.

The document, running to more than 150 pages, was sent to complainants last week for feedback. Google received a copy in April in which the European Commission accused it of using its dominant Android mobile operating system to shut out rivals.

The EU competition enforcer in its charge sheet, known as a statement of objections, said it planned to tell the U.S. technology giant to halt payments or discounts to mobile phone manufacturers in return for pre-installing Google's Play Store with Google Search.

The regulators also want to prevent Google from forcing smartphone makers to pre-install its proprietary apps if this restricts their ability to use competing operating systems based on Android.

Google "cannot punish or threaten" companies for not complying with its conditions, according to the document seen by Reuters.

The Commission's investigation followed a complaint by FairSearch, a lobby group supported by companies that want to ensure they are not disadvantaged by search engine market dominance, in March 2013.

Google could face a large fine because the anti-competitive practices, which started from January 2011, are still ongoing, the document said.

"The Commission intends to set the fine at a level which will be sufficient to ensure deterrence," it said.

The penalty could be based on revenue generated from AdWords clicks by European users, Google Search product queries, Play Store apps purchases and AdMob's in-app advertisements.

Commission spokesman Ricardo Cardoso declined to comment. Google said: "We look forward to showing the European Commission that we've designed the Android model in a way that's good for both competition and consumers, and supports innovation across the region."

Separately, the Commission, which has also charged Google of favoring its own shopping service over those of rivals, could also fine it in that case, according to a second charge sheet seen by Reuters.

Google may have to rank rival comparison shopping services in the same way as its own services, the charge sheet sent in July and forwarded to its foes last week said. The document, close to 150 pages, was heavily edited, with large sections of confidential information redacted by Google.

The Commission said it would decide at a later stage whether to let Google charge competitors for displaying their services prominently, with the amount corresponding to Google's operating cost or a nominal amount based on the lowest reserve price for AdWords which is currently 0.01 euro per click.

(Reporting by Foo Yun Chee; Editing by Robin Pomeroy)

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