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EU regulators on Jul 18 slapped Alphabet, Inc.’s (GOOGL - Free Report) Google with an antitrust fine of 4.34 billion euro ($5 billion) for illegally using its android software to suppress competition. Per the antitrust regulators’ findings, Google is misusing its dominance in the mobile business by forcing android phone makers to pre-install Google Search and its Chrome browser along with the Google Play app, thus weakening rival search providers and app makers.
The EU has said that the ruling will benefit consumers, who will now have more options to choose from. The decision at the same time will create a level playing field and invite stiffer competition from the likes of Amazon.com, Inc. (AMZN - Free Report) , Microsoft Corporation (MSFT - Free Report) and Samsung Electronics Co., Ltd. . However, the ruling comes as a caution to competitors on violating antitrust laws.
Google Draws the Ire of EU
The EU has made the biggest regulatory attack on a technology giant so far by imposing a $5 billion fine on Google. According to the currency union, Google gives android mobile software for free to smartphone makers but forces them to exclusively pre-install Google Search and its Chrome browser apps if they want to license the Play Store app.
The regulators found Google to have misused its market dominance between 2011 and 2014. Consequently, smartphone makers will now have the chance to opt for some alternative software from competitors like Microsoft and Amazon.
Also, Google pays handset makers, browser developers and telecommunication carriers to run its search engine and collect user data. According to research firm eMarketer, this has helped Google make $50 billion annually in mobile advertising sales, accounting for one third of the global market share. Understandably, with the new ruling, Google might feel a pinch on its revenues.
At the same time, Google Chrome’s market has increased considerably in Europe and other parts of the world since 2009. This has made Google a preferred choice for many smartphone makers. Now, with the competition opening up, the likes of Samsung could demand a higher share of ad revenues from Google for pre-installing Google Search and Chrome. This is much like the way Apple earns a huge portion of revenue-sharing from Google for making the latter the default search engine for Safari and iOS’s core search feature.
Google Not the Only One to be Penalized
The EU’s decision certainly is an eye-opener for not only Google, but also other technology players. The recent regulatory crackdown comes with the objective of fair play, which the EU is well known for creating.
Moreover, regulators also said that Apple Inc. (AAPL - Free Report) , Google’s biggest rival in the smartphone market, “didn’t sufficiently constrain” Google from carrying out such a practice. It goes without saying that the ruling is aimed at creating healthy competition in the smartphone market.In 2011, Apple faced a class action lawsuit from the EU and the Department of Justice. This was within a year after it launched the iBooks Store and an antitrust investigation was carried out on if the company and various book publishers have got into some arrangement on pricing.
The EU had earlier come down heavily on Microsoft for pre-installing its browser, Internet Explorer, on the Windows operating system. In 2009, the company was fined and since then has been providing users with a choice of browsers.
Similarly, Intel Corporation (INTC - Free Report) too was fined 1.06 billion euro in 2009 by the EU. The world’s largest chipmaker was accused of using illegal sales tactics to shut out small rival AMDs. Intel has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Even Playing Field
Understandably, EU’s recent decision has created ample opportunities for not only consumers, but also smartphone manufacturers and other software companies. The ruling definitely invites smartphone makers like Samsung and Lenovo Corp., which have a tie-up for selling devices loaded with Google’s applications. These smartphone makers can now opt for other software makers like Amazon’s Alexa search and Microsoft’s Bing.
Moreover, smartphone makers could also charge other software makers for pre-installing their search engines and browsers. One the other hand, many smartphone makers would prefer installing Google Chrome and its browser, as cheaper options have flopped in the market. But this definitely will come with a bargain, which in all likelihood will be in the form of smartphone makers demanding a higher portion of mobile ad revenues.
Given this scenario, it needs to be seen how things unfold and what steps smartphone makers and rival software companies take. Also, whether the EU ruling dents Google’s profits is something to be closely watched.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%. And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
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Will EU's Crackdown on Google Help Rivals?
EU regulators on Jul 18 slapped Alphabet, Inc.’s (GOOGL - Free Report) Google with an antitrust fine of 4.34 billion euro ($5 billion) for illegally using its android software to suppress competition. Per the antitrust regulators’ findings, Google is misusing its dominance in the mobile business by forcing android phone makers to pre-install Google Search and its Chrome browser along with the Google Play app, thus weakening rival search providers and app makers.
The EU has said that the ruling will benefit consumers, who will now have more options to choose from. The decision at the same time will create a level playing field and invite stiffer competition from the likes of Amazon.com, Inc. (AMZN - Free Report) , Microsoft Corporation (MSFT - Free Report) and Samsung Electronics Co., Ltd. . However, the ruling comes as a caution to competitors on violating antitrust laws.
Google Draws the Ire of EU
The EU has made the biggest regulatory attack on a technology giant so far by imposing a $5 billion fine on Google. According to the currency union, Google gives android mobile software for free to smartphone makers but forces them to exclusively pre-install Google Search and its Chrome browser apps if they want to license the Play Store app.
The regulators found Google to have misused its market dominance between 2011 and 2014. Consequently, smartphone makers will now have the chance to opt for some alternative software from competitors like Microsoft and Amazon.
Also, Google pays handset makers, browser developers and telecommunication carriers to run its search engine and collect user data. According to research firm eMarketer, this has helped Google make $50 billion annually in mobile advertising sales, accounting for one third of the global market share. Understandably, with the new ruling, Google might feel a pinch on its revenues.
At the same time, Google Chrome’s market has increased considerably in Europe and other parts of the world since 2009. This has made Google a preferred choice for many smartphone makers. Now, with the competition opening up, the likes of Samsung could demand a higher share of ad revenues from Google for pre-installing Google Search and Chrome. This is much like the way Apple earns a huge portion of revenue-sharing from Google for making the latter the default search engine for Safari and iOS’s core search feature.
Google Not the Only One to be Penalized
The EU’s decision certainly is an eye-opener for not only Google, but also other technology players. The recent regulatory crackdown comes with the objective of fair play, which the EU is well known for creating.
Moreover, regulators also said that Apple Inc. (AAPL - Free Report) , Google’s biggest rival in the smartphone market, “didn’t sufficiently constrain” Google from carrying out such a practice. It goes without saying that the ruling is aimed at creating healthy competition in the smartphone market.In 2011, Apple faced a class action lawsuit from the EU and the Department of Justice. This was within a year after it launched the iBooks Store and an antitrust investigation was carried out on if the company and various book publishers have got into some arrangement on pricing.
The EU had earlier come down heavily on Microsoft for pre-installing its browser, Internet Explorer, on the Windows operating system. In 2009, the company was fined and since then has been providing users with a choice of browsers.
Similarly, Intel Corporation (INTC - Free Report) too was fined 1.06 billion euro in 2009 by the EU. The world’s largest chipmaker was accused of using illegal sales tactics to shut out small rival AMDs. Intel has a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Even Playing Field
Understandably, EU’s recent decision has created ample opportunities for not only consumers, but also smartphone manufacturers and other software companies. The ruling definitely invites smartphone makers like Samsung and Lenovo Corp., which have a tie-up for selling devices loaded with Google’s applications. These smartphone makers can now opt for other software makers like Amazon’s Alexa search and Microsoft’s Bing.
Moreover, smartphone makers could also charge other software makers for pre-installing their search engines and browsers. One the other hand, many smartphone makers would prefer installing Google Chrome and its browser, as cheaper options have flopped in the market. But this definitely will come with a bargain, which in all likelihood will be in the form of smartphone makers demanding a higher portion of mobile ad revenues.
Given this scenario, it needs to be seen how things unfold and what steps smartphone makers and rival software companies take. Also, whether the EU ruling dents Google’s profits is something to be closely watched.
Today's Stocks from Zacks' Hottest Strategies
It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6%, and +67.1%. And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.
See Them Free>>