Announcing the fine on Wednesday in Brussels, the EU said Google must end such conduct within 90 days or pay a penalty of up to 5% of the average daily turnover of its parent company, Alphabet.
The company has said it will appeal against the fine.
EU competition commissioner Margrethe Vestager said: "Today, mobile Internet makes up more than half of global internet traffic. It has changed the lives of millions of Europeans.
"Our case is about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to the Google search engine.
"In this way, 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. This is illegal under EU anti-trust rules."
In a detailed statement, the European Commission, the executive arm of the EU, said Google:
- has required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google's app store (the Play Store);
- made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices; and
- has prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google (so-called "Android forks").
It said the Commission had concluded that Google was dominant in general Internet search services, licensable smart mobile operating systems and app stores for the Android mobile operating system.
This is the second fine levied by the EU on Google. In June last year, Google was fined €2.42 billion (US$2.7 billion) for allegedly abusing its search engine dominance to give illegal advantage to its own comparison shopping service. The company has appealed the decision.
A third fine is said to be in the EU pipeline, this for alleged anti-business practices involving Google's AdSense advertising system.
The EU has also floated the idea of breaking up Google into a number of smaller units, with Vestager saying the political bloc harbours "grave suspicions" about the firm's dominance of the search market.
Brussels is not the only one to fine Google for anti-business practices. In February, the Competition Commission of India fined the company 135.86 crore rupees (about US$21.1 million) for "abusing its dominant position in online general Web search and Web search advertising services in India".
Google and other big multinational technology companies are also under pressure over alleged tax evasion, with the EC having unveiled a proposal to tax these companies at a rate of 3% as an interim measure.
Photo and graphic: courtesy European Union