Google lost most of its appeals against the EU decision on Android

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Google suffered legal blows on two continents this week, a significant setback in the company’s efforts to fight accusations that it is abusing its dominance in digital advertising and mobile phones.

The EU’s General Court in Luxembourg on Wednesday largely upheld a 2018 decision by the EU’s competition regulator. fined Google $4.33 billion for allegedly abusing the market dominance of its Android mobile operating system to promote and entrench its Google search engine and Chrome browser on mobile devices.

The decision came shortly after a federal judge in the United States District Court for the Southern District of New York on Tuesday denied most of Google’s request to dismiss lawsuits filed by a coalition of states led by Texas, alleging that Google abused its dominance in digital advertising tools, allowing the case to move into the discovery phase and eventually toward trial.

The EU’s ruling means Google will likely continue to implement some of the changes it has made since then to comply with the 2018 decision, including offering EU users a selection screen of different search engines. The Android case was the largest of three antitrust fines totaling more than $8 billion imposed on Google by the EU since 2017—and focused on mobile phones, one of the company’s fastest-growing areas.

The ruling is also a vote of confidence in the European Commission, the bloc’s antitrust body, which has been aggressive in targeting major U.S. tech companies and other companies over concerns about anti-competitive behavior. Last week, the Commission blocked

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A $7.1 billion merger with Grail Inc., two American companies developing cancer tests.

In the US, the decision of Judge P. Kevin Castel was closely followed because the Ministry of Justice was preparing a similar antitrust case against Google for its position in the advertising technology industry.

In both cases, Google has achieved some partial victories.

In the EU, a court overturned one element of a ruling that alleged Google violated competition laws by paying manufacturers revenue sharing for exclusively pre-installing only Google search and not competing search engines. As a result, the court reduced the total fine by about 5% to 4.13 billion euros, about the same in dollars.

“We are disappointed that the court did not overturn the decision in its entirety,” a Google spokesman said, adding that Android had created more competition in the mobile phone industry. The company has previously said it should be able to recoup the money it spends on Android development by encouraging manufacturers to install Google Search.

The court’s decision can still be appealed to the EU’s highest court, the Court of Justice. Google said it would review the decision before deciding whether to appeal.

In the US, a judge dismissed claims related to Google’s “Jedi Blue” advertising deal with rival Facebook—now known as Meta Platforms Inc. Prosecutors claimed the deal was part of a plan to “kill” an alternative ad technology called header bidding that Google executives feared would hurt their business. It also rejected the plaintiffs’ claim that Google’s Accelerated Mobile Pages, or AMP, technology was part of an anticompetitive conspiracy to limit header bidding, among several other plaintiffs’ claims.

In a blog post published Tuesday in response to the US decision, Google called Jedi Blue’s allegations “the centerpiece” of the Texas case and cited various allegations that have been thrown out as evidence that the case is “deeply flawed.”

In a statement Wednesday, Texas Attorney General Ken Paxton welcomed the judge’s decision, calling it “a big step in the right direction to make our free market truly free.”

The 2018 EU Android case was significant because it focused on Google’s efforts to grow its mobile business, but also because it highlighted Google’s detractors’ arguments that antitrust enforcement is taking too long. By the time the commission issued its decision, those detractors said that Android had already helped Google Search become as dominant on mobile devices as it was on desktops.

Reducing the time it takes for companies to make changes in the market was the main reason why the EU introduced a new digital competition law called the Digital Markets Act, adopted earlier this year. The new law will eventually making it illegal for Google and other very large tech companies to engage in a range of practices that the bloc considers anti-competitive, including some of the practices for which the commission has previously issued fines.

The 2018 decision focused heavily on how Google tied the licensing of its apps for Android devices. In that ruling, the EU ordered Google to stop requiring smartphone makers to pre-install the company’s Chrome search app and web browser as a condition of licensing Google’s popular Play app store. It also said the company would have to allow manufacturers to install Google apps on systems running alternative versions of the Android operating system.

The EU argued that Google’s practice made it difficult for potential competitors to emerge and was part of a strategy to ensure that Google’s search engine remained dominant as consumers began using search engines on their smartphones.

Google quickly appealed the 2018 decision, but also had to act on it while the appeal was pending. Google has changed licensing agreements for manufacturers and implemented what it calls the Choice Screen on Android devices, allowing users of new phones in the EU to choose alternative default search engines. So far that selection screen it does not appear to have had a significant impact on the market share of Google searches in Europe.

Google’s appeal in the case focused in part on whether its Android operating system is dominant, arguing that the Commission was wrong to consider Android devices as their own market, without seeing them as competition

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iPhone and iPad devices. The company also argued that the requests to merge Google Search with its app store were not anti-competitive and that restrictions on the use of other versions of Android were necessary to ensure that Android phones would be compatible with the company’s apps. On Wednesday, the court rejected Google’s arguments on all those points.

Google also argued that revenue-sharing agreements that require phone makers not to pre-install other search engines cover less than 5% of the market and have no impact on competitors. On Wednesday, the court sided with Google, ruling that the Commission had not proven its case on the issue.

It is the second court victory of the European Commission against Google in as many years. Last year, Google lost its appeal separate antitrust fines of $2.42 billion for allegedly directing users of its search engine to Google’s comparison shopping ads at the expense of other services. A second appeal to the EU’s highest court is ongoing.

Google was too fined $1.49 billion in 2019 to limit how some websites can display ads sold by the company’s competitors. His appeal of that case is still pending.

Google continues to attract the attention of antitrust regulators in the EU. Last year, the commission opened an official antimonopoly investigation accusations that Google is abusing its dominant position in advertising technology. Google said its ad-tech tools are competitive and will work with the Commission to resolve its issues.

The Wall Street Journal reported earlier this year that Google offered concessions to try to fend off a potential antitrust lawsuit in the US targeting the company’s ad tech business.

The Wall Street Journal reported earlier this year that Google offered concessions to try to fend off a Justice Department antitrust lawsuit targeting the company’s ad technology business, but people familiar with the matter say the offer is unlikely to satisfy regulators.

Write Sam Schechner on sam.schechner@wsj.com and Kim Mackrael on kim.mackrael@wsj.com

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