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Eurobites: EU Socks Google With $5B Monster-Fine for Android Control-Freakery

Paul Rainford
7/18/2018
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Also in today's EMEA regional roundup: high marketing costs hit Telekom Austria's earnings; streaming services on the march in UK; Ericsson appoints new digital services chief.

  • Google (Nasdaq: GOOG) has been fined €4.34 billion (US$5 billion) by the European Union for what the EU views as abuse of its market dominance in terms of how it controls the use of its Android operating system. The fine sets a record for antitrust penalties, dwarfing the previous €2.4 billion ($2.7 billion) knuckle-rapper Google was handed down last year for what was deemed to be unfair promotion of its own shopping-comparison services in its search results. Commissioner Margrethe Vestager, who is charge of competition policy in the EU, said: "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." Google has been given 90 days to change its business model or face further penalties. (See Google Facing 'Multi-Billion Fine' From EU Over Android – Reports, Eurobites: EU Fines Google $2.7B Over Shopping Shenanigans and Pinpricks & Big Sticks: An Anatomy of Telco & Tech Fines.)

  • Telekom Austria Group , which has operations in seven countries across central and eastern Europe, reported a 1.3% year-on-year increase in revenues to €2.18 billion ($2.53 billion) for the first six months of 2018, with service revenues increasing in all markets apart from Slovenia. However, its earnings before interest and tax (EBIT) decreased by 46.2% to €147.2 million ($171 million) due to high marketing and branding costs, as CEO Alejandro Plater explained in the operator's official statement on the numbers: "The reported net result of course was negatively impacted by D&A [depreciation and amortization] related to the Group-wide roll-out of the A1 brand. Excluding the accounting effect of this extraordinary brand amortisation, the net result rose by 22%." The operator has 20.7 million mobile customers across the group, of which 5.3 million are in Austria and nearly 4.9 million in Belarus. It also has 2.57 million fixed broadband customers, of which 1.44 million are in Austria. (See Telekom Austria Reports H1 Growth.)

  • Streaming services have overtaken "traditional" satellite- and cable-based pay-TV in terms of customer numbers in the UK for the first time, according to Reuters, citing research by BARB Establishment Survey. Netflix, Amazon Prime Video and Now TV (the latter a Sky offshoot) attracted 15.4 million subscribers in the first quarter, compared to 15.1 million still on old-school pay-TV contracts.

  • Ericsson AB (Nasdaq: ERIC) has named Jan Karlsson as head of its digital services business as it tries to execute a turnaround at the struggling division. Despite return to operating profitability in the second quarter, and boosting turnover at its networks business, Ericsson recorded an 11% year-on-year fall in revenues at digital services, to 8.8 billion Swedish kroner ($1 billion), and a 6% increase in its operating loss, to SEK2.4 billion ($270 million), amid declining sales of legacy products. Karlsson has been acting head of digital services since February and was previously in charge of business support services, a department within digital services. Helena Norrman, Ericsson's chief marketing officer, told Light Reading that Karlsson's permanent appointment was "a sign of confidence in the work the team is doing." Commenting on efforts to restore profitability at digital services, Norrman said: "We have to remember that the products are strategically very important to customers and so it is important for us to work through to get to performance. That of course will take some time and we haven't yet turned the corner." (See Ericsson Back in Profit After Fierce Cuts & 5G Action.)

  • Earnings at Sweden's Tele2 AB (Nasdaq: TLTO) rose 13% year-on-year to SEK1.78 billion ($200 million) in the second quarter, on revenue that was up 6% to SEK6.49 billion ($732 million). The results were enough for the operator to raise its guidance on adjusted earnings, from between SEK6.5 billion and SEK6.8 billion to between SEK6.8 billion and SEK7.1 billion for the full year. Tele2 is currently digesting Com Hem, the Swedish cable operator it agreed to acquire at the start of the year in a $3.3 billion deal. (See Sweden's Tele2 to Swallow Com Hem in $3.3B Deal.)

  • M-Pesa, Vodafone Group plc (NYSE: VOD)'s mobile payment platform that has 20 million active users in Kenya, could be introduced in neighboring Ethiopia, if current talks between Safaricom and the Ethiopian government go to plan. As Reuters reports, it is hoped that the introduction of M-Pesa in Ethiopia would help transform the country's economy by allowing its users to by-pass what is generally considered an inefficient traditional banking system. (See Is M-Pesa Heading to Ethiopia?)

  • Smart street lighting is coming to Edinburgh, courtesy of Telensa , which is installing its controls in 64,000 LED lights as part of the Scottish capital's energy efficiency program. Telensa's Planet wireless central management system provides monitoring to identify faults and measures energy consumption.

    — Paul Rainford, Assistant Editor, Europe, Light Reading

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    Spumanti
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    Spumanti,
    User Rank: Light Beer
    7/18/2018 | 5:13:27 PM
    Re: Numbers
    I agree here...
    James_B_Crawshaw
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    James_B_Crawshaw,
    User Rank: Blogger
    7/18/2018 | 3:13:38 PM
    Re: Numbers
    Yes, English Premier League football rights is key to the Sky franchise. If they were outbid on that they would be toast. 
    mendyk
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    mendyk,
    User Rank: Light Sabre
    7/18/2018 | 2:30:08 PM
    Re: Numbers
    Thanks, James. According to the Ofcom report, it looks like pay TV subs in the UK have fallen by about 3% since 2012. My interpretation of this is that it's a bit drizzly, but the sky (or Sky) isn't falling yet.
    James_B_Crawshaw
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    James_B_Crawshaw,
    User Rank: Blogger
    7/18/2018 | 1:01:22 PM
    Re: Numbers
    True. There is even significant overlap between the streaming services with 29% of streamers taking both Amazon and Netflix, and 12% taking Amazon, Netflix and Now. See P 16 in the report:

    https://www.ofcom.org.uk/__data/assets/pdf_file/0014/116006/media-nations-2018-uk.pdf

     
    mendyk
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    mendyk,
    User Rank: Light Sabre
    7/18/2018 | 12:26:05 PM
    Numbers
    Re the number of streaming subs vs. conventional pay TV subs in the UK -- this probably isn't a zero-sum game, right? One way to check is to look at the before and after numbers for pay TV.
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