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Google Under Fire From US And EU

ENTERPRISE TIMES UK
http://www.enterprisetimes.co.uk/2016/04/21/google-fire-us-eu/

Google has again found itself the centre of much unwanted attention. Yesterday the European Commission (EC) told the company it believed it had breached EU antitrust rules around Android. Within hours Consumer Watchdog, a US nonprofit public interest group had challenged the Federal Trade Commission (FTC) to file similar antitrust charges in the US.

The FTC has yet to publically respond to the request from Consumer Watchdog and it may be days before it does. Even then there is no guarantee that it will follow the path of the EC and open an investigation or even file charges. This will give Google time to address one jurisdiction at a time without having to worry about a coordinated investigation both sides of the Atlantic.

European Commissioner Margrethe Vestager, in charge of competition policy, said: “A competitive mobile internet sector is increasingly important for consumers and businesses in Europe. Based on our investigation thus far, we believe that Google’s behaviour denies consumers a wider choice of mobile apps and services and stands in the way of innovation by other players, in breach of EU antitrust rules. These rules apply to all companies active in Europe. Google now has the opportunity to reply to the Commission’s concerns.”

In the Consumer Watchdog press release John M. Simpson, Consumer Watchdog’s Privacy Project Director comments: “Google engages in exactly the same anti-competitive, unfair and abusive practices in the United States. Our antitrust enforcers need to step up and do their job instead of letting the Europeans do it for them.”

What are the claims against Google?

The EC press release sets out three areas where Google is alleged to have breached antitrust rules. These are:

  1. requiring manufacturers to pre-install Google Search and Google’s Chrome browser and requiring them to set Google Search as default search service on their devices, as a condition to license certain Google proprietary apps;
  2. preventing manufacturers from selling smart mobile devices running on competing operating systems based on the Android open source code;
  3. giving financial incentives to manufacturers and mobile network operators on condition that they exclusively pre-install Google Search on their devices.

What goes around, comes around

For those who followed the case against Microsoft over a decade ago these charges bear a remarkable similarity. The difference being that back then Google was one of those companies complaining about Microsoft forcing Internet Explorer and other tools to be installed on Windows while pressuring some PC and laptop manufacturers from selling Linux-based machines.

The case against Microsoft saw it forced to give users a regular reminder that there were other browsers available on Windows and provide a means for users to change the browser they used. The same action is likely in the case of Google Chrome as there are already several other browsers that will run on Android.

In its contract with device manufacturers, Google has said that they can only licence access to the Google Play store if they pre-install Google Search as the primary search engine. The EC wants this changed as do other search engines. This, like the browser issue can be easily solved using the same remedy as browser choice and can be done quickly.

Some PC manufacturers also took the opportunity in the Microsoft case to release newer products supporting Linux. Since then Google has also released its own Chrome OS which is preinstalled on machines from several vendors. In this case there are several other mobile operating systems based on Linux in the market. Some, like Samsung Tizen already have a wide adoption in Asia and India and limited sales in the rest of the world.

Firefox OS, Ubuntu Phone and Amazon Fire OS are also alternatives to Android and are being shipped in different parts of the world with differing degrees of success. As with Tizen it is clear that whatever pressure Google may have brought on manufacturers there is a growing alternative to using Android.

Keeping control of its applications and code base

One of the things that a lot of people are not aware of is that it is possible to take the Android code and create your own OS. This is because Android is based on Linux. The problem is that if you do that Google will not allow you to run its apps on that code. Google believes that by keeping control of where its apps run it can ensure that they are safer than on alternative versions of Android.

The EC sees this differently. It believes that Google is using this to prevent manufacturers releasing devices running alternative versions of Android and harming consumers as a result. This comes back to access to the Google Play Store and the use of Google Search.

It will be interesting to see how much Google can defend its app stance in the face of this antitrust case. It could argue that it has a perfect right to decide where its apps run. After all, these are proprietary apps owned by Google. The EC could then demand that it allow other apps to search and provide access to the Google Play Store.

Why does this matter?

Very simply and in the words of the EC press release:

“..this conduct ultimately harms consumers because they are not given as wide a choice as possible and because it stifles innovation.”

Conclusion

The EC claims against Google are, in many ways, a repeat of the case brought against Microsoft which cost it 497 million (£381 million, $794 million) in 2004. There were later additional fines which eventually meant Microsoft ended up paying over 1 billion for its behaviour. Across the US, Microsoft also faced a series of court cases and paid out significant sums over the same issues.

In this case it will be interesting to see what happens now. Google will be all too aware that the EC is prepared to go all the way and will hope to get this settled quickly. While Consumer Watchdog has so far limited its call to the FTC any successful action in Europe may quickly see several US states take similar action here as they have done in other historical cases.