The European Commission filed a formal complaint against Google (Alphabet) accusing the company of forcing its own products on those that use the Android OS in the new smartphones that they offer. The complaint is reminiscent of a similar antitrust complaint that Europe had with Microsoft’s tying of a media player to Windows, which cost the company $2.5 billion.
European Commission continues antitrust assault on tech companies
The EU Competition Commissioner Margrethe Vestager believes that Alphabet is unfairly forcing smartphone makers to sign contracts that force manufacturers to favor Google search and its browser Chrome.
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Vestager points out that “over half of Internet traffic takes place on mobile devices” and “what we found is that Google pursues an overall strategy on mobile devices to protect and expand its dominant position in Internet search.”
The commission also maintains that Alphabet is unfairly paying device manufacturers who run Android (virtually every smartphone or tablet not made by Apple) with shared advertising revenue if they make Google search the default on their devices.
“Google has abused its dominant position,” Ms. Vestager said today. “Google’s behavior has harmed consumers by restricting innovation in the wider mobile space.”
“It may have become too difficult for other search engines or app stores to be available to consumers,” she added.
Alphabet is an easy target and Ms. Vestager’s beliefs were echoed today by other lawmakers.
“The requirement for phone makers and operators to preload a set of Google apps is certainly problematic from the consumers’ point of view,” said Ramon Tremosa and Andreas Schwab, two members of the European Parliament who have never shied from criticizing Google, Amazon and Facebook. “By acting this way, Google is, de facto, giving its own apps unfair advantage.”
Google refutes the charges and welcomes debate
Alphabet is not taking the complaint lightly just as it didn’t lay down almost exactly a year ago when the EU filed a formal complaint over the company’s comparison-shopping options. Google maintains that the complaint is baseless if only because Android is a “free and open-source operating system.”
Android was developed by Android, Inc, which Google acquired in 2005. The first release of the Android operating system was released two years later after a massive investment of both money and manpower from Google.
“We take these concerns seriously,” Kent Walker, Alphabet’s general counsel, said in a statement. “But we also believe that our business model keeps manufacturers’ costs low and their flexibility high, while giving consumers unprecedented control of their mobile devices.”
Walker reminded the commission that “our partner agreements are entirely voluntary.”
“We look forward to working with the European Commission to demonstrate the careful way we’ve designed the Android model in a way that’s good for competition and for consumers,” Walker concluded in his statement today.
Google’s fault that people are to lazy to download alternatives?
That is certainly an argument that Alphabet will consider using when it fights these charges. There is no question that Google Maps is the best map application available, but if users wish to download other options they are free to do so. Additionally, there are a number of other browsers available to Android users without being stuck with the perfectly good Chrome browser.
Google has been in the cross-hairs of the EU since Nokia and Microsoft backed an industry group in 2013 to complain to the regulatory commission when Microsoft began producing its own handsets. The EU opened a formal investigation of Alphabet in 2015 with the probe assigned the task of looking into Google’s mobile anti-competition policies dating back to 2011.
Beyond the EU’s problems with Google Search and its browser Chrome, the commission maintains that Google forces its Play Services software down the throats of handset makers like Samsung Electronics Co. and HTC Corp.
“It may have become too difficult for other search engines or app stores to be available to consumers,” said Ms. Vestager today. Apple, quite simply, doesn’t have this problem despite leading Google in mobile ad sales. The reason being is that Apple manufactures its own handsets rather than foisting its software on others. If you want to run iOS, you can only do so on an iPhone.
The complaint does present a problem for Alphabet that will make roughly $30 billion this year in revenues related to mobile activity, so it’s not pocket change as more and more people in the developing world rely on mobiles for search and commerce rather than desktops.
Google has 12 weeks to respond to the formal complaint but in the mind of the commission there is another option.
“The remedy in this case is basically quite simple — it’s to stop these practices,” said Vestager today.