The EU is also targeting Google's payments to telecoms network operators and manufacturers who exclusively install Google search on devices and contracts that prevent handset makers selling smartphones using other versions of Android. She continued to say Google has been "denying rivals a chance to innovate and compete on the merits".
Google has built a massive business of banner and videos ads, thanks largely to its central role on Android devices.
The commission requires Google to enforce new guidelines in 90 days.
Google will be appealing the decision. The ecosystem carries all the properties needed for a fair competition - "rapid innovation and lower prices".
The commission explained that Google breached European Union antitrust rules by illegally tying its search and browser apps - namely, Google Search and Google Chrome browser - which are pre-installed on all Android devices sold in the EU.
Google has been issued with a record fine of more than four billion euro by the European Commission competition authorities for abusing its market position through the Android mobile operating system.
Shares in Alphabet, the company's parent, fell as much as 1.1% in premarket trading Wednesday after the size of the fine was reported. The Android case decision comes after a three-year investigation into Google's mobile operating system.
Smartphone manufacturers are allegedly required to pre-install Google Search and Google's Chrome browser on their devices and then set both as the default. "In competitive mobile markets, consumers should be able to make a meaningful choice between search engines and browsers and which apps they can download on their phones and tablets".
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A spokeswoman for Google did not immediately respond to an email seeking comment.
Executive director of the European Publishers Council Angela Mills Wade, meanwhile, urged EU regulators to go after Google for its dominance in digital advertising. The tying practices ensured the pre-installation of Google's search engine and browser on practically all Google Android devices and the exclusivity payments strongly reduced the incentive to pre-install competing search engines.
The penalty from the European Commission is the highest antitrust violation fine that has ever been imposed on a company for breaching EU competition rules.
Google has previously said it will argue that the European Union is wrong and that it doesn't block users or handset manufacturers from installing other apps.
"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", said Pichai.
"Today, mobile internet makes up more than half of global internet traffic", Ms Vestager added.
Furthermore, Google's tight control of the Android OS licensing has also prevented the proliferation of Android operating system forks where competitors could have gained a similar foothold.