The ongoing crackdown against technology firms by various regulatory agencies, amidst concerns of data security and monopolization, indicates the tech majors will have to revisit their business strategies and expansion plans. While some argue that the functioning of technology firms is so complex that it is not easy to put their activities under scrutiny, there is an increasing clamor for stricter regulation through new rules.
In the latest among a series of penalties suffered by Alphabet’s Google (GOOG, GOOGL), European Union regulators Wednesday imposed a record fine of $5 billion on the tech giant for abusing its dominant position in the market. Following the report, Google’s stock suffered a modest loss in early trading Wednesday.
The EU imposed the record fine on the tech giant for abusing its dominant position in the market
While issuing the order in an antitrust lawsuit involving Google’s Android operating system, the regulators also asked the company to make changes to the way Android functions, after finding that the company manipulated the popular operating system to promote its own mobile apps and services.
Google allegedly abused the supremacy of Android in the smartphone market to give more visibility to select apps and services on its search engine, thereby encouraging smartphone manufacturers to pre-install them on their devices. The company also coxed the manufactures and telecom firms into several agreements before allowing them to sell Android-based devices to customers.
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Ever since the EU issued formal charges two years ago, Google has been dismissing the allegations. It is not yet known whether the company plans to appeal the decision. It argued that by lowering the prices for consumers, Android encouraged healthy competition among mobile companies. Responding to the charges of biased promotion of apps, the company said Android allows users to install third-party apps.
Despite Google’s sound financial position, the massive fine is likely to have a noticeable impact on its upcoming quarterly results.
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The company has been asked to stop pushing smartphone manufacturers to pre-install Chrome, so as to make the web browser the default search engine on the devices. Google’s business model will undergo a paradigm change, creating a situation where makers of rival search engines and operating systems will get a chance to expand their market.
Earlier this month, social media giant Facebook (FB) was handed a $662,900 fine by the Information Commissioner’s Office in the UK in connection with the data breach scandal involving Cambridge Analytica.