Google could pay a record fine of €4.125 billion to the European Union after the European Court of Justice’s General Court upheld a decision on an antitrust case linked to its Android operating system for smartphones.
The court said: “The General Court largely confirms the Commission’s decision that Google imposed unlawful restrictions on manufacturers of Android mobile devices and mobile network operators in order to consolidate the dominant position of its search engine.”
The court did, however, lower the fine that the European Commission had imposed on Google by €200 million from €4.34 billion to €4.125 billion.
The court added: “In order better to reflect the gravity and duration of the infringement, the General Court considers it appropriate however to impose a fine of €4.125 billion on Google, its reasoning differing in certain respects from that of the Commission.”
Big Tech companies like Google have faced antitrust probes in several jurisdictions and have previously agreed to pay the fines – however, this €4 billion figure will be a new record amount.
Separately, Google and Meta Platforms have been fined $71.8 million in South Korea for violating privacy laws and globally several countries have been targeting US tech companies for alleged antitrust behavior. Even US regulators probed the tech giants over monopoly concerns, but nothing concrete came from the investigations.
Google “Disappointed” over Record Fine
Google is meanwhile “disappointed” by the fine in Europe and in a comment to Tech Crunch, a Google spokesperson said: “We are disappointed that the Court did not annul the decision in full.
“Android has created more choice for everyone, not less, and supports thousands of successful businesses in Europe and around the world.”
Notably, along with targeting US tech companies over alleged monopolies, several countries are also contemplating a digital tax. Many countries want to milk the business that US tech giants like Apple, Alphabet, and Meta Platforms do in their countries.
There has been a sell-off in tech stocks this year and Google parent Alphabet (NYSE: GOOG) is now getting near its 52-week lows – Meta Platforms stock hit a new 52-week low on Tuesday and is now down over 50% for the year.
Although GOOG stock is down sharply this year, most analysts have a buy rating on Alphabet stock, while the company has been trying to diversify its business and lower its reliance on ad revenues.
Google is Also Investing in Healthcare
Healthcare seems to be the new battleground for tech companies. Alphabet has led a $1 billion investment round into Verily, its subsidiary focused on healthcare, and away from Google, companies like Apple, Amazon, Microsoft, and TikTok are also betting on the healthcare industry.
Meanwhile, Alphabet reported mixed earnings for the second quarter of 2022, with Google advertising revenues increasing 12% to $56.3 billion in the quarter, although Meta Platforms posted a YoY fall in its revenues in the quarter and also predicted a fall in its third-quarter revenues.
Meta Platforms is the second worst performing FAANG stock of 2022 but after the sharp fall, many brokerages see it as too cheap to ignore. Morgan Stanley reiterated the stock as overweight while Mohnish Pabrai advised buying Meta Platforms stock and predicted it to double over the next few years.
US Tech Stocks Fell After Worse Than Expected August Inflation
US tech stocks tumbled on Tuesday after August CPI data came in worse than expected – Meta Platforms and Nvidia fell to their 52-week lows yesterday as US inflation rose 0.1% month-on-month while analysts were expecting it to fall 0.1%.
The Fed began the process of tapering late last year and finally raised rates by 25 basis points in March, following that up with a 50-basis point rate hike in May.
In June and July, Powell raised rates by 75 basis points. Looking at the hot August inflation reading, a 75-basis point rate hike looks the most likely scenario at the Fed’s meeting later this month.
A slowing US economy and Fed’s rate hikes would only dampen the digital ad market which is negative for companies like Google.
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