The information commissioner gave Facebook a rap over the knuckles earlier this month, putting the company on notice of likely fines – the equivalent of a few minutes’ revenue – for breaches of privacy. Yesterday the European commission gave Google a rather more vigorous correction, fining it €4.3bn for abusing its market dominance with the Android operating system which powers the overwhelming majority of the world’s mobile phones.

Google is appealing. The billions of euros at stake aside, it is easy to see why. Google gives most of Android away, not only to the consumers who use it, but to the companies that build their phones around it. As the company points out, there are more than 24,000 competing Android phones available today, from 1,300 companies. How can that possibly constitute a harmful monopoly? Besides, Google has real competition in the smartphone world from Apple. Google’s search engine is something that makes our lives easier every day; this would be much less true if it charged users for every answer delivered rather than charging the advertisers for every user delivered to them.

At the same time, these are exactly the factors that make the commission’s decision so interesting and significant. For Google’s business to work, it must become as easy as possible for advertisers to reach users. That is the purpose of all the software that Google gives away, from the Android operating system, through to YouTube, Google search on phones and the Chrome browser. This might look like a cross-subsidy, but on the other hand it is the heart of the company’s business. The software that Google gives away is not designed to make a profit on its own. It operates to draw people into the advertising ecosystem.

If Android ran on phones that did not draw people into the Google universe, it would be pointless for the company. That is one of the hinges of the commission’s judgment, since there is no technical reason that Android must help Google’s business. Because it is open source, anyone can build it and put it on their phones – or at least one version of it. This is why Amazon runs a variety of Android on its tablets.

This free version does not include the bits that make a phone useful for anything but making telephone calls, and this was the weak spot in Google’s defence. None of the enticements – the mail, the search, the maps and the browser – are included. Neither is access to the Play store, where all the other games and apps are found. These can only be used with a proprietary chunk of software that Google controls; and manufacturers who want to use the Play store and 11 crucial Google apps must agree not to build so much as a single phone that does not include them. It is all or nothing. This licensing trick is the way in which Google has undoubtedly limited competition. The commission’s decision to punish it probably comes too late to undo the damage it has done. Technology moves too fast. But it highlights wider issues, still to be resolved.

All digital businesses tend towards a monopoly, and this is in part because in some important ways they benefit consumers more the larger they grow. Yet as customers we pay for this in other ways and as citizens even more so, not least because the companies fattened by monopoly profits grow too large to fail and too powerful to challenge. (Last year, Google spent $18m lobbying in Washington alone.) There is a public interest in preventing any company from acquiring almost unlimited power. Regulation defends democracy.