After months of waiting, it has finally happened: Europe is officially accusing Google of anti-competitive behaviour over Android.
Why? The short answer is that the European Commission thinks that Google is using the dominant position of its mobile operating system, Android, to promote its apps and products at the expense of its competitors’ — thereby stifling innovation.
“In Europe you can be big, you can grow, you can be dominant. The one thing you can’t do is abuse your position,” EU competition chief Margrethe Vestager said at a press conference announcing the Commission’s formal complaint.
It’s a pretty huge deal: If found guilty, Google could be fined up to $7.4 billion (£5.1 billion), and forced to change the way apps are bundled with Android, directly affecting the company’s bottom line. It’s also the latest in a string of antitrust investigations around the world.
The Commission Statement of Objections, which Google has three months to formally respond to, lays out three key ways in which it alleges Google has broken Europe’s tough competition laws. These are:
1. Google is forcing companies to install its products
First, the Commission highlights the fact that if smartphone manufacturers using Android want to install the Play Store (Google’s app store), then they are contractually required to install Google Search as well.
“As a result,” the Commission says, “rival search engines are not able to become the default search service on the significant majority of devices sold in [Europe]. It has also reduced the incentives of manufacturers to pre-install competing search apps, as well as the incentives of consumers to download such apps.”
2. Google is preventing manufacturers from running competing operating systems
If a company wants to sell some smartphone with Google’s apps on them, then they have to sign an “Anti-Fragmentation Agreement,” which, the compeition says, “commits [the manufacturer] to not sell devices running on Android forks.”
For context, Android is open source, meaning anyone can “fork” it for free and make their own version, customising it however they want. But companies like Samsung would be prevented from building phones that fork Android’s open source core to create a potential rival, because they use Google’s apps in other phones.
3. Google is providing financial incentives to companies to buoy up its products
Last, the Commission says that Google gives “significant financial incentives to some of the largest smartphone and tablet manufacturers as well as mobile network operators on condition that they exclusively pre-install Google Search on their devices.”
In all three of these cases, Google is — allegedly — using its position to unfairly and illegally promote its products at the expense of potential competitors, the European Commission alleges. This has “harmed consumers by stifling competition and harming innovation,” Vestager said.
Google’s response: “Android is good for competition”
Google has 12 weeks — three months — to formally respond to the European Commission’s Statement of Objections, but has already made some public comment. In an email statement, Google’s SVP and general counsel Kent Walker asserted that “Android is good for competition.” He writes:
Android has helped foster a remarkable — and, importantly, sustainable — ecosystem, based on open-source software and open innovation. We look forward to working with the European Commission to demonstrate that Android is good for competition and good for consumers.
Google also published a blog post written by Walker immediately after the Commission’s objection was made public. It stresses the “voluntary” nature of its partner arrangements, and that the overall model is good for consumers:
The European Commission has been investigating our approach, and today issued a Statement of Objections, raising questions about its impact on competition. We take these concerns seriously, 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.