We knew the European Union was looking into Google’s Android mobile operating system and the company’s business practices surrounding it, so it’s no surprise that the EU decided to file formal antitrust charges against Android. This isn’t the EU’s first probe into Google’s alleged antitrust practices, as a similar search-related investigation is also underway. But now, Google has to defend its decision to prioritize its services on Android OS, including online search.
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“A competitive mobile internet sector is increasingly important for consumers and businesses in Europe,” Commissioner Margrethe Vestager said. “Based on our investigation thus far, we believe that Google’s behavior 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.”
The EU says that Google breached local antitrust laws by:
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 licensing certain Google proprietary apps;
preventing manufacturers from selling smart mobile devices running on competing operating systems based on the Android open source code;
giving financial incentives to manufacturers and mobile network operators on condition that they exclusively pre-install Google Search on their devices.
If found to have breached EU law with its Android operating system, Google could face a fine of up to 10% of its annual revenue, which could amount to several billions of dollars. Additionally, any changes Google might make to Android – and online search on Android devices – could further hurt the company’s bottom line in the future, especially considering that mobile ads are expected to make up more than half of net advertising revenue for Google this year.
The EU will analyze Google’s Android licensing contracts that force OEMs to preinstall a certain number of Google apps on smartphone and tablets, and grant them preferential treatment. Furthermore, the EU will look at Google’s way of regulating Android forks and existing exclusivity deals – read the EU’s formal announcement at this link.
Google issued a written response to the EU. “The European Commission has been investigating our approach, and today issued a Statement of Objections, raising questions about its impact on competition,” Google said. “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.”
“Our partner agreements have helped foster a remarkable – and, importantly, sustainable – ecosystem, based on open-source software and open innovation,” Google added. “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.” Google’s full response is available at this link.