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By Valentina Pop and Sam Schechner 

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (July 11, 2018).

BRUSSELS -- The European Union's antitrust watchdog is expected to find Alphabet Inc.'s Google illegally abused the dominance of its Android operating system for mobile phones, issuing a multibillion-euro fine and ordering changes to the company's Android-related business practices, people familiar with the matter said.

The European Commission, the bloc's executive arm, is expected to find that the California-based company's actions allegedly thwarted potential competitors to safeguard its mobile-advertising business.

The fine could surpass the EUR2.4 billion ($2.82 billion) that the EU levied against Google last year for abusing the dominance of its search engine to skew search results in favor of its own comparison-shopping service. But the penalty isn't likely to reach into the double-digit billions range, these people said. A third formal probe into Google's AdSense for Search advertising service is still under way.

The exact remedial actions Brussels will require weren't clear. The EU could order the company to change contracts Google signs with companies that make Android phones.

A Google spokesman declined to comment. Google, in the past, has denied the EU contentions. The Mountain View, Calif.-based company said phone makers pre-install plenty of rival services, and argue that Android has increased competition in the smartphone market, thereby lowering prices and benefiting consumers.

Apart from the fine, the case strikes at the core of Google's advertising business, which the company says is growing much faster on mobile devices than on traditional desktop computers. Any decision that ends current Google requirements that encourage manufacturers to pre-install Google apps on Android-powered phones could potentially cut into revenue, some analysts said.

The EU has alleged that Google strong-arms phone makers into pre-installing Google Search and the company's Chrome internet browser on their mobile devices by bundling them with its popular Play store for Android applications, and at times paying them to pre-install Google exclusively.

The EU has also alleged that Google violated competition rules by barring phone makers from selling official versions of Android if they also market devices that run unofficial versions, called forks. The decision could potentially order changes to those agreements, as well.

Google says that it has the right to impose such a requirement to make it easier for developers to make apps that work on a large array of Android phones. The company says the entire ecosystem could be threatened if many companies offer incompatible versions of Android.

The decision would be the latest in a series of decisions in which the bloc has cast itself in the vanguard of a backlash against U.S. tech superpowers, on issues including competition, taxes and privacy. EU competition chief Margrethe Vestager has become the face of that battle, arguing that regulators must do more to restore fairness to the digital market.

Write to Valentina Pop at valentina.pop@wsj.com and Sam Schechner at sam.schechner@wsj.com

(END) Dow Jones Newswires

July 11, 2018 02:47 ET (06:47 GMT)

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