Saturday

21st Jan 2017

Google rejects EU antitrust charges on Android

  • Google dominates 90 percent of the EU online search market. (Photo: Rosa Jimenez Cano)

Google’s Android operating system has boosted competition rather than stifling it, the US tech firm said on Thursday (10 November), as it formally answered European Commission antitrust charges.

The company allows phone manufacturers and mobile network operators to use Android for free, but it comes with 11 pre-installed Google apps, including a search function and Play, the company’s own app store.

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The system is widely successful. Some 75 percent of the phones in the EU already use Android, and its share of the market is growing. Google also has a 90 percent share of Europe's internet search market, which is where it makes most of its money.

EU competition commissioner Margarethe Vestager said in April that Google protected its dominant market position by imposing unjustified conditions on manufacturers and mobile network operators that use Android.

Google replies that the deal allows it to sustain its investments, while lowering prices for phone makers and consumers.

”Android means manufacturers don’t have to buy or build expensive mobile operating systems. As a result, smartphones are now available at dramatically lower prices - as little as €45 - and have become much more accessible to many more people,” Google’s senior vice president and general counsel Kent Walker wrote in a blog post.

People want pre-installed apps

Vestager also criticised that Google provided financial incentives to manufacturers that exclusively installed Google’s search app on their smartphones and tablets.

Walker said the suite was necessary to ensure compatibility of the operating system among different devices.

Users want to have some pre-installed apps, so they can use the phone at once after taking it out of the box, the lawyer said.

”Android’s competitors, including Apple’s iPhone and Microsoft’s Windows phone, not only do the same, but they allow much less choice in the apps that come with their phones,” he wrote.

He said Google only asked for a small number of pre-installed apps - 11, out of the 38 to 45 which usually come with a new phone - and didn’t prevent manufacturers from installing rivals’ products.

According to Google, smartphone owners download on average 50 apps to complement the ones which come with the cell.

The Information Technology and Innovation Foundation (ITIF), an American think tank, threw its weight behind Google, dismissing all the commission’s objectives as invalid.

Daniel Castro, ITIF vice president, wrote in his own blog post that the EU executive ”put ideology ahead of consumers”.

”The root of the problem with EU regulators’ complaints is that they are relying on outdated economic theories. They do not seem to understand that innovation-based industries, like mobile operating systems, operate differently than conventional industries,” he wrote.

Jake Ward, president and CEO of the Application Developers Alliance, recently wrote for this website that the EU’s case against Google was bad for app developers. 

FairSearch, a lobby group against Google’s dominant position in the online search market, said "it was time to end Google’s abuse of its Android monopoly” and called on the commission to find the US company liable.

A complicated case

”Any manufacturer or network operator seeking to differentiate its devices or services is prevented from doing so by the web of Google's contractual restrictions the commission says is illegal. Google imposes severe sanctions on those who defy its insistence on conformity. For example, a phone maker that offers even a few phones that do not comply with Google's straightjacket faces a cut-off from all of Google’s branded products,” FairSearch’s counsel Thomas Vinje wrote.

The case is highly technical. Google was due to reply in July, but asked six times to extend the deadline.

Last week, the US company rejected charges in two other EU probes, on online shopping and AdSense service for advertisement. 

The commission continues its investigation of all the three cases.

If found guilty of breaching EU competition law, Google could face fines up to 10 percent of its global revenue.

EU should raise own taxes, says report

A group chaired by former Italian PM and EU commissioner Mario Monti says Brexit should be used to create EU-level levies to depend less on member states contributions, and to abolish member states rebates in the EU budget.

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