EU Issues Antitrust Charges Against Google

BY Heather Greenfield
April 20, 2016

Brussels — The European Commission’s Commissioner of Competition, Margrethe Vestager, issued a Statement of Objections against Google outlining alleged competition problems with Google’s contracts for the distribution of Android and its mobile apps.  The complaint focuses on three specific issues.  The Commission has identified alleged problems with Google’s distribution of its mobile apps on Android, agreements with smartphone manufacturers to ensure that Android’s open source operating system does not fragment, and contractual agreements that establish Google search as a default search engine on some phones.

The European Commission’s announcement comes one day after the Canadian Competition Bureau’s decision to clear Google of antitrust charges, including some of the same agreements that the European Commission has outlined in its statement of objections.

The Computer & Communications Industry Association has advocated on competition issues for more than 40 years in both Washington and Brussels. The following can be attributed to CCIA Vice President James Waterworth:

“While we can appreciate the European Commission’s desire to be vigilant about investigating competition issues, the market for apps and services is extremely competitive.  At first blush, it is difficult to see the contracts identified by the Commission as being competition problems. In fact, they have clear procompetitive motivations.  The agreements identified by the Commission do not prevent hardware manufacturers and mobile operators from preinstalling whatever non-Google apps they so choose.  As a result, consumers have more choice, not less.  Furthermore, the charges are curious given the ease at which consumers can easily download competing apps and customize their phones.  In fact, nearly 80% of consumers do customize their smartphone’s home screen, and the average Android user downloads nearly 100 apps.”

“With 1.6 million Europeans working in the app economy and 100 billion app downloads in 2015 it is clear that this is a very vibrant space.”

“The contracts that the European Commission points to also make sense if one understands how open source software works and problems that frequently arise in the distribution of open source operating systems.  For example, the anti-fragmentation agreements identified in the Commission’s complaint are designed to keep a consistency across different Android implementations so users have a similar experience across devices and app developers more easily create compatible apps.  Fragmentation has hurt the competitive viability of prior distributed software projects, such as Symbian and Unix.  As such, antifragmentation agreements actually facilitate competition by allowing consumers to switch between Android phones made by different manufacturers.

“The app distribution agreements identified by the Commission are designed to give consumers a baseline user experience across all Android phones.  This is necessary to compete with proprietary operating systems, such as Apple’s iOS.  Furthermore, the agreements do not prevent the installation of other competing apps and mobile phone operators usually pre-install apps of their choosing as well.  As a result, these agreements provide users more pre-installed choices, not less.

“It’s also important to consider Android’s history. Android injected competition into the mobile marketplace, and provided consumers choice in a marketplace dominated by proprietary software.  It has also helped drastically lower the price of smartphones for consumers. Android has also allowed many different mobile phone manufacturers to enter the market more easily without the need to also develop their own operating systems and app development communities.

“The Commission needs to be careful as challenging the contractual provisions that allow open source operating systems to compete against proprietary software can backfire.  If not careful, the Commission could harm competition, not foster it.”

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