The penalty is the highest that the Commission has ever served on a business for a breach of EU competition rules. Its decision came after it highlighted concerns with practices relating to the Android mobile operating system and their effects on competition in the internet search market.
However, Google defended its business model for Android and said it will appeal the decision.
In its statement, the Commission took issue with the pre-installation of Google's 'search' app and 'Chrome' browser on "practically all Android devices sold in the EEA" and with payments it said the company made to mobile device manufacturers and network operators to ensure exclusive pre-installation of the search app. It accused Google of preventing device manufacturers that wished to pre-install Google apps from doing so unless they agreed not to sell devices that ran on alternative versions of its Android operating system that it had not approved.
EU competition commissioner Margrethe Vestager said: "Our case is about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to the Google search engine. In this way, Google has used Android as a vehicle to cement the dominance of its search engine. 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 company has been given 90 days to pay the fine the Commission has imposed or face potential further penalty.
Google has previously defended its "partner agreements" and said the business model it operates when selling its Android mobile operating system are good for both device manufacturers and consumers.
In a new blog issued in response to the Commission's statement, Google chief executive Sundar Pichai said the regulator's decision had ignored the competition that Android mobile devices face from phones running on Apple's iOS software. He also said it also "ignores the new breadth of choice and clear evidence about how people use their phones today".
"The free distribution of the Android platform, and of Google’s suite of applications, is not only efficient for phone makers and operators – it’s of huge benefit for developers and consumers," Pichai said. "If phone makers and mobile network operators couldn’t include our apps on their wide range of devices, it would upset the balance of the Android ecosystem. So far, the Android business model has meant that we haven't had to charge phone makers for our technology, or depend on a tightly controlled distribution model."
"We are concerned that today’s decision will upset the careful balance that we have struck with Android, and that it sends a troubling signal in favour of proprietary systems over open platforms. Rapid innovation, wide choice, and falling prices are classic hallmarks of robust competition and Android has enabled all of them. Today’s decision applauds Android while rejecting the business model that supports it. Android has created more choice for everyone, not less, and we intend to appeal," he said.
Google is already appealing against an earlier decision by the Commission to impose a fine on it over the way the company displays product search results in the online shopping market.