How should Google have accounted for potential large fines

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Question - Google (a wholly-owned subsidiary of Alphabet) is a US-based multinational corporation that has been under multiple investigations into its business practices. In 2015, the EU began an investigation of the Android operating system for phones. In 2016, the EU sent a charge sheet relating to the Android system and another relating to Google's AdSense system. Ultimately, Google was fined 2.4 billion euros for hindering rival shopping websites (2017) , 4.3 billion euros for its handling of the Android system (2018), and 1.49 billion euros for its search practices (2019).

Required -

1. How should Google account for the EU Competition Commission investigations in its 2016 annual report? Why?

2. How should Google have accounted for the potential large fines that the company faced and when should it have done so? Why?

3. How would the capital markets react to announced investigations like those filed by the EU Competition Commission in 2015 and 2016? How would the capital markets react to the announcement that such large fines were imposed?

Reference no: EM132640278

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