The European Commission’s charges on Google Android are likely to result in a lengthy dispute as analysts understand the internet giant will put up a vigorous defence to all charges. EURACTIV’s partner PaRR reports.
The Commission addressed formal charges to Google and its parent company, Alphabet, last week (20 April), accusing them of abuse of dominance by imposing restrictions on mobile devices manufacturers and mobile network operators.
Google made signs that it will cooperate and assist the commission, but PaRR understands it is also marshalling arguments to counter each of the commission’s concerns.
“Google looks forward to working with the EC to demonstrate that Android is good for competition and good for consumers,” Kent Walker, Senior Vice President & General Counsel of Google said.
“Android has helped foster a remarkable – and, importantly, sustainable – ecosystem, based on open-source software and open innovation,” he added.
The European Commission is focusing on three categories of abuse. According to the Brussels-based watchdog, Google is abusively requiring manufacturers to pre-install Google Search and Google’s Chrome browser and requiring them to set Google Search as a default search service on their devices, as a condition to license certain Google proprietary apps.
There are concrete figures in the SO of the advantages of being pre-installed, it is understood, as well as many examples of individual cases where it was not possible to install rivals’ products.
It is understood Google is likely to argue that bundling is only problematic if it excludes competitors, and to underline that the company does not restrict the potential for other apps to be used alongside its own.
Prompts built into the operative system that ensure there are no restrictions could back up this point.
The executive also blames Google for requiring manufacturers who wish to pre-install Google proprietary apps such as Google Play Store and Google Search to enter into an “Anti-Fragmentation Agreement” preventing manufacturers from selling smart mobile phones running on competing operating systems based on the Android open source code.
On this point, PaRR understands Google will likely argue the requirement is necessary to ensure that Google apps are stable, well-functioning and secure.
A fragmented Android ecosystem would be useless, as it would offer no stability and consistency for app developers, the internet giant could tell the Commission.
Revenue sharing agreements under the spotlight
Finally, Brussels is concerned that the financial incentives Google gives to manufacturers and mobile network operators (MNO) on the condition that they exclusively pre-install Google Search on their devices reduce their incentive to pre-install competing search services.
Such financial incentives are given in the form of a revenue share which is not problematic as such. It is understood the European Commission is concerned to the extent that the incentives are offered conditional on the exclusive installation of Google Search.
The Commission would be concerned that there would not be revenue share if they breach the condition not to pre-install competing services, it is understood, and that if manufacturers do not pre-install Google Search they cannot have Google Play Store, since these products are tied.
Google is likely to counter that revenue sharing agreements are not universal, however, and not all Android phones are covered by those agreements. It is understood the company concluded some agreements with telcos and others with manufacturers, but sometimes only in relation to a specific time period or a specific model.
Google is also likely to argue that revenue sharing agreements do not preclude them concluding similar agreements with competitors, for example on other devices.
It is understood the company will counter that phone manufacturers have the power to decide what apps to pre-install, and therefore have more power than Google in this respect.
The fact that Google pays to be prominent on an Android mobile operating system is an indication that most bargaining power is with manufacturers and MNOs, the company is likely to argue.
The SO considers the relevant period of the abuse as starting in 2011, it is understood.
The complaint is understood to outline an extensive set of contracts with major MNOs and mobile devices manufacturers.
Different from Microsoft case
Both parties sought to distance the dispute from the lengthy struggle between the Commission and Microsoft.
Competition Commissioner Margrethe Vestager said this issue was in many respects quite different and that “a lot of things changed since that case”. On the face of it, however, there are similarities in the legal characterisation of the two cases, both involved bundling of products for example.
Google believes that – unlike Microsoft – it is not restricting others from being present on Android devices and that alternatives are actually pre-installed.
In its blog, Google writes that it “believe[s] that our business model keeps manufacturers’ costs low and their flexibility high, while giving consumers unprecedented control of their mobile devices”.
‘The remedy is simple: Stop’
There are four formal complainants of which some are known, namely Fair Search and Russian search engine Yandex. Google now has 12 weeks to reply to the SO and can request an oral hearing to present its views, Vestager said.
“The remedy in this case is simple: to stop practices,” Vestager said.
The EC is also probing Google’s advertising activities, Vestager confirmed in the 20 April statement.
Inquiries into Google’s copying of publishers’ online content in search results are also ongoing, Vestager noted. News Corp this week said it had filed an antitrust complaint to the Commission over alleged content scraping by the search engine, as reported.
Google has now responded to charges outlined in a statement of objections the Commission sent to the company a year ago in a separate probe into the allegedly favourable treatment the tech giant gives its comparison shopping service in search results, she added.