BRUSSELS — European authorities increased their efforts to rein in Silicon Valley on Wednesday by fining Google a record $5 billion for abusing its power in the mobile phone market, a steep antitrust penalty that is among the most aggressive regulatory moves ever made against US technology companies.
The 4.34 billion euro fine far surpassed the 2.4 billion euros, about $2.8 billion, the European Union levied against Google last year over the company’s unfair favoring of its own services in Internet search results. The new penalty highlighted how aggressively European authorities are pushing to regulate tech firms in areas like antitrust, privacy, taxes, and the spread of misinformation and hate speech.
The ruling strikes at a core element of Google’s hugely profitable business model: providing phone makers such as Samsung and Huawei its Android operating system if they agree to prioritize its search bar, Chrome browser, and other apps over those of the company’s rivals.
In addition to being hit with the hefty fine, Google must now decouple the Android system from its other services in Europe, potentially losing users and advertising revenue.
“Google has used Android as a vehicle to cement the dominance of its search engine,’’ said Margrethe Vestager, Europe’s antitrust chief. “These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules.’’
The fine announced Wednesday, she said, “reflects the seriousness and the sustained nature’’ of Google’s actions.
Regulators in Europe have already adopted tough new privacy rules that countries elsewhere are beginning to use as a template. Officials here have also investigated tech companies’ tax practices, called for closer scrutiny of artificial intelligence, and added strict measures requiring social media companies to more forcefully combat false news and extremist content.
Under the decision, Google has 90 days to end its anti-competitive practices. If it fails to do so, it faces penalties of up to 5 percent of the worldwide average daily revenue of its parent company, Alphabet.
Google said it would appeal the decision, and the case is likely to drag on for years. The company must deposit the money in a holding account while the legal process unfolds. If it ultimately loses the appeal, the fine will be distributed among the EU’s member states.
The ultimate effect of the ruling Wednesday may be muted, given that Europe has largely acted alone in taking regulatory action against Silicon Valley titans. Lawmakers and regulators in the United States have mostly taken a hands-off approach that has allowed big tech companies to expand their influence, though there have been signs recently of shifting attitudes and a tougher stance by Congress.
Google’s services remain immensely popular with customers, and its stock price, profits, and revenue continue to soar. In the three years that the European Commission carried out its investigation, annual revenue for Alphabet grew to $111 billion from $75 billion. Google has also strengthened its dominance in the mobile phone market, with more than 1.25 billion Android handsets sold globally last year, according to the research firm IDC.
The EU’s case against Google underscores the broader challenge regulators face in overseeing the digital economy. By the time authorities home in on an area deserving of scrutiny, the market may have moved on.
“Fast-moving markets are where competition law is most important,’’ said Jonathan Kanter, a partner at the law firm Paul Weiss and a former antitrust investigator for the Federal Trade Commission. But “when you have cases that are many years old, you’re fighting old battles instead of the next one.’’
In the end, the fine’s long-term impact may well be dwarfed by the changes to Android that Google is being forced to make.
The company has long portrayed the operating system as an open-source platform that hardware manufacturers can use and adapt based on their needs. But the European Commission said the system came with strings attached.
As part of the ruling, the commission is requiring Google to end policies that required handset makers to agree to make Google Search and Chrome the default services on Android-based devices to gain access to the latest versions of the system.
In addition, antitrust officials said Google must stop providing financial incentives to handset makers and wireless carriers to prioritize its services, and can no longer require manufacturers to sign agreements not to sell devices with modified versions of Android that do not include Google’s apps.
In effect, the authorities said, Google had been negotiating terms that companies in the saturated smartphone market — where profit margins are razor thin — could not refuse.
The Silicon Valley giant’s rivals cheered the decision. Locking handset-makers into deals with Google made it “very challenging to compete,’’ said Gabriel Weinberg, chief executive of DuckDuckGo, a privacy-focused search engine. “We would hope the US would ultimately follow suit and take another look at this.’’
Google argued the European decision was an attack on its advertising-based business model. The company said it required handset makers to use its suite of apps as a way of recouping the billions of dollars it spends to make Android. The arrangement, the company says, allows manufacturers to compete with Apple’s iPhones and iPads, by making phones and tablets of various designs and prices, while Google makes money through its services.
In a statement, Sundar Pichai, Google’s chief executive, said the decision “misses just how much choice Android provides to thousands of phone makers and mobile network operators who build and sell Android devices; to millions of app developers around the world who have built their businesses with Android; and billions of consumers who can now afford and use cutting-edge Android smartphones.’’
