How we will account for the EC Android fine in our Q2 2018 results

On July 18, 2018, the European Commission (EC) announced its decision that certain contractual provisions in agreements between Google and Android partners infringed European competition law and imposed a EUR 4.34 billion ($5.07 billion*) fine on Google. For our response to the EC ruling, please see this blog post. We intend to appeal.

As we disclosed in our 8-K, in accordance with the accounting rules, we plan to accrue the fine, resulting in a charge of $5.07 billion in our Q2 results.

Here’s how we expect to account for the fine in our Q2 results:

• We will report a separate operating expense line for the $5.07 billion charge on the income statement.
• The fine is not tax deductible.
• Therefore, the charge will reduce our GAAP net income and GAAP EPS by the full amount.

For information on the June 27, 2017 EC online shopping decision and accounting please see this blog post dated June 30, 2017.

Posted by Amie Thuener, Chief Accounting Officer

*Based on the exchange rate on June 30, 2018