Google’s appeal against EU record £3.8bn fine begins – how did we get here?
Three years after receiving a record fine from the European Commission alongside an order to stop abusing its control of the Android operating system, Google is set to have its day in court.
Back in 2018 the company was fined €4.34bn (£3.8bn) for forcing phone makers to pre-install apps including Google Search and Chrome to the exclusion of other search engines and web browsers.
The fine was a fraction of the €116bn (£99bn) parent company Alphabet recorded in revenues that year, but the real cost to the company was the threat to its future income if smartphones landed in consumers’ hands without Google apps already installed.
Google’s five-day appeal against the decision is being heard at European Court of Justice in Luxembourg, where the company hopes to have the Commission’s decision annulled in its entirety.
A failure to do so could completely reshape the smartphone landscape, but other challenges targeting Google inside the US pose a far more significant risk to the company and could lead to the search giant being broken up into several smaller businesses.
Google’s appeal will be heard in Luxembourg from Monday
Breaking up monopolies
While there are an over-abundance of comparisons between the oil industry of the late 19th century and the tech industry of today, the slow movement of regulators is one of the most striking similarities.
It was in 1890 that US Congress passed a law to tackle the monopolies which had sprung up over the preceding half century, but it took more than three decades for that law to be used to break up Standard Oil, a company which by 1904 controlled more than 90% of oil production in America.
Standard Oil’s business excelled due to its innovations in refining oil, but also because the company had rapaciously acquired rivals and used its commercial heft to strike deals with railroad companies (themselves a target for early antitrust action) at discounted rates which the remaining oil businesses could not compete with.
In a landmark ruling in 1911, the US Supreme Court upheld that Standard Oil was an illegal monopoly and ordered it to be broken up into 34 independent companies. Though that power is not available to the European Commission, there is a growing movement in the US calling for similar actions to be taken against tech giants whom some believe are guilty of the same anticompetitive practices.
Standard Oil controlled more than 90% of US oil production at its height
Modern antitrust law
Google is a very different company to Standard Oil, but the alleged unfairness of its practices – using its control of Android to force phone manufacturers who want to include the Google Play app store on their phones to also pre-install Google Search and Chrome – follows the same model of undermining rivals.
The investigation into Google coercing phone manufacturers formally began in 2015, although the Commission made its first enquiries about the company’s practices in 2013 when an association of Google’s rivals calling itself FairSearch lodged a complaint against its business practices.
The ruling came three years later in 2018 and now, three years later, Google’s appeal has reached the European Court of Justice. Thomas Vinje, counsel to FairSearch and partner at law firm Clifford Chance, told Sky News he expected there could be another appeal after the hearing in Luxembourg.
“Antitrust enforcement is not, on its own at least, sufficiently robust, sufficiently effective, to be able to address these really extraordinary concerns. I’m not sure the world has ever faced a situation where there is such a concentration of power in such a central element of today’s economy, and antitrust law is not up to the task,” he said.
“That is largely because they’re complex cases,” Mr Vinje explained.
“They’re more complex than rail roads or oil distribution – I’m not saying those are simple – but the issues faced in Big Tech today are a hell of a lot more complicated. So there is a hell of a lot more room for obfuscation… and dragging things out.
“So by virtue of the completely appropriate rights that defendants have in these cases, the cases just take too long.”
The Commission accused Google of attempting to cement the dominance of Google Search
What is Google’s response and appeal?
Google, which claims the most popular search term on rival search engines such as Bing is the word “Google” itself and which controls more than 90% of the market for web searches, disputes the Commission’s arguments about its dominance, although that won’t feature prominently in its arguments next week.
In a news briefing ahead of the hearing, the company explained to journalists that it believes a lot has changed in the years since the Commission issued its decision.
Key to Google’s appeal is the argument that its control ensures Android is a platform which can run across millions of smart devices made by different manufacturers, increasing the economic benefits for developers – including rival web browser makers such as Opera, which is supporting Google’s appeal – and ultimately consumers.
Google will note that a revenue sharing agreement it had with phone manufacturers and mobile network operators, cited as an illegal contractual restriction by the Commission, ended in 2014.
The company also strongly disputes the way that the Commission calculated the €4.34bn (£3.8bn) fine, something the Commission said was “calculated on the basis of the value of Google’s revenue from search advertising services on Android devices” inside the European Economic Area.
The US Department of Justice has filed charges against Google
What is the threat in the US?
Even if Google succeeds in getting the Commission’s decision annulled or amended, it faces three more challenges in the US which are backed by severe powers to tackle monopolies.
The first complaint was filed last October in a case led by the Trump administration’s Department of Justice and joined by 11 states – though with apparent bipartisan support – charging Alphabet with “unlawfully maintaining monopolies in the markets for general search services”.
It followed a congressional report which accused Amazon, Apple, Facebook and Google of monopolising the digital market and recommended antitrust laws be used to break them up.
Two more cases were brought against Google in December.
One from the attorneys general of 35 states accuses the company of anticompetitive practices in order to retain its dominance in search, while another filed by the attorneys general from 10 states focuses on the company’s monopoly power in digital advertising markets.
Google has denied engaging in anticompetitive practices.
Police in riot gear have raided Columbia University and arrested pro-Palestinian protesters after demonstrators occupied one of its buildings.
It comes after New York City Mayor Eric Adams said on Tuesday that the demonstration at the Ivy League school “must end now” and claimed it had been infiltrated by “professional outside agitators”.
University bosses said they called in the New York Police Department (NYPD) after protesters “chose to escalate the situation through their actions”.
“After the university learned overnight that Hamilton Hall had been occupied, vandalised, and blockaded, we were left with no choice,” the university said in a statement.
Police enter Hamilton Hall. Pic: Reuters
Police gather around Columbia University before moving in to break-up the protest. Pic: Reuters
Police stand guard near an encampment of protesters on the grounds of Columbia University. Pic: Reuters
Arrested protesters from Columbia University are loaded onto a bus. Pic: Reuters
“The decision to reach out to the NYPD was in response to the actions of the protesters, not the cause they are championing.
“We have made it clear that the life of campus cannot be endlessly interrupted by protesters who violate the rules and the law.”
The protest began when students barricaded the entrance of Hamilton Hall at the Manhattan campus on Tuesday and unfurled a Palestinian flag out of a window.
Video footage showed protesters locking arms in front of the hall and carrying furniture and metal barricades to the building.
A group called Columbia University Apartheid Divest (CUAD) said they had renamed the building “Hind’s Hall” in honour of Hind Rajab, a six-year-old girl killed in a strike on Gaza in February.
Protesters unfurled a flag with the words ‘Hind’s Hall’. Pic: Reuters
Protesters hang banners on the exterior of Hamilton Hall building.
Pic: Reuters
Demonstrators said they planned to remain at the hall until the university conceded to the CUAD’s three demands: divestment, financial transparency and amnesty.
However, officers moved in on the campus on Tuesday night after university bosses wrote to New York City officials and the New York Police Department formally asking for assistance.
Keep up with all the latest news from the UK and around the world by following Sky News
A large group of officers dressed in riot gear entered the campus late on Tuesday evening. Officers were also seen entering the window of a university building via a police-branded cherry-picker-style vehicle.
Earlier, Mayor Adams urged demonstrators to leave the site. “Walk away from this situation now and continue your advocacy through other means,” he said.
Columbia University also threatened academic expulsions for students involved in the demonstration.
Protesters block the entrance of Hamilton Hall at Columbia University. Pic: AP
Demonstrators block the entrance of Hamilton Hall. Pic: AP
Protests at Columbia earlier this month kicked off demonstrations which have spread to university campuses from California to Massachusetts.
Dozens of people were arrested on Monday during protests at universities in Texas, Utah, Virginia, and New Jersey.
Police moved to clear an encampment at Yale University in Connecticut on Tuesday morning, but there were no immediate reports of arrests.
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Meanwhile, the president of the University of South California issued a statement on Tuesday after a swastika was drawn on the campus.
“I condemn any antisemitic symbols or any form of hate speech against anyone,” Carol Folt said.
“Clearly it was drawn there just to incite even more anger at a time that is so painful for our community. We’re going to work to get to the bottom of this immediately, and it has just been removed.”
Earlier, National Security Council spokesperson John Kirby said President Joe Biden believed students occupying buildings was “absolutely the wrong approach” and “not an example of peaceful protest”.
US
Changpeng Zhao: Former boss of world’s largest crypto exchange Binance jailed for allowing money laundering
The former boss of the world’s largest cryptocurrency exchange has been jailed for four months for allowing money laundering.
The sentence was handed down to Binance founder Changpeng Zhao, nicknamed CZ, after he pleaded guilty to breaching US anti-money laundering laws designed to prevent terrorist financing and funds going to sanctioned countries.
The prison term was far less than sought by US prosecutors who wanted a three-year term – twice the maximum 18 months recommended under federal sentencing guidelines – to be tough on the man once thought to be the most powerful person in the crypto world.
The defence had called for probation with no prison time for their client. A $50m (£40m) fine has already been paid by Zhao.
Despite the massive fine, he remains a billionaire and the wealthiest crypto executive, according to Forbes, with magazine putting his wealth at $33bn (£26.4bn).
Changpeng Zhao
Zhao apologised before his sentencing at a court in Seattle, saying: “I failed here. I deeply regret my failure and I am sorry.”
But district judge Richard Jones told him: “You had the wherewithal, the finance capabilities, and the people power to make sure that every single regulation had to be complied with, and so you failed at that opportunity.”
He is the second major crypto boss to go to prison. Last month, the founder of FTX Sam Bankman-Fried was sentenced to 25 years for stealing billions of dollars from the now-bankrupt crypto exchange.
Bankman-Fried has appealed against his conviction and his sentence.
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Sam Bankman-Fried jailed for 25 years
Keep up with all the latest news from the UK and around the world by following Sky News
A ‘wild west’ model
Zhao stepped down from his role at Binance in November after he and the company admitted evading requirements under the US Bank Secrecy Act.
The company agreed to a $4.3bn (£3.4bn) penalty as prosecutors said it used a “wild west” model that failed to report 100,000 suspicious transactions involving terrorist groups.
Prosecutors had also said Binance supported the sale of child sexual abuse material and received the proceeds of ransomware cyberattacks.
The US Justice Department brought the case as part of its clamp down on criminal activity within cryptocurrency, best known for Bitcoin.
Binance is also being investigated and sued by another US agency, the Securities and Exchange Commission.
The company had once processed about two-thirds of all cryptocurrency transactions.
A two-year-old boy has died after a bouncy castle was lifted off the ground by a strong gust of wind, US authorities have said.
The parents of the boy – named in reports as Bodhi Naaf – are “grappling with unimaginable grief” following the incident on Saturday, a Go Fund Me page said.
The “tragic accident” happened near Casa Grande, Arizona, according to a statement from the Pinal County Sheriff’s Office.
“Several children were playing in a bounce house when a strong gust of wind sent it airborne into the neighbouring lot,” the sheriff’s office said.
“A two-year-old child was transported to the hospital where he passed away.”
A second child was taken to hospital with injuries that were not considered life-threatening, Sky’s US partner NBC reported.
Keep up with all the latest news from the UK and around the world by following Sky News
A GoFundMe page has been set for up for Bodhi’s parents Karl and Cristy, who are expecting a child in late May.
“This devastating loss has left Karl and Cristy grappling with unimaginable grief,” it said.
“Adding to their challenges, Cristy is due to give birth to their second child on 31 May 2024. Amidst their sorrow, they face the daunting task of preparing for the arrival of their newborn.
“As a community, we want to offer our support and alleviate the financial burden that accompanies such tragedies.”
The fundraising page has received than $138,000 (£110,000).
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A spokesperson for the Phoenix Fire Department confirmed the couple has ties to the department, which is providing them with support, NBC said.
The statement said: “We are all devastated by this tremendous loss of life. The fire service prides itself on being one big family.
“Our membership and our department are doing everything we can to support Karl and Cristy during this difficult time.”
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