On the face of things, the European Commission (EC) has done well to slap a $5 billion on Google for what it termed as abuse of dominance by putting “illegal restrictions on Android device manufacturers and mobile network operators”. The three main charges leveled by EC are that Google forced Android device manufacturers to pre-install the Google Search app and Chrome as a pre-condition for licensing them its Play Store, that it paid large manufacturers to exclusively pre-install the Google Search app on their devices (presumably this has to be non-Android phones) and that it prevented manufacturers who wanted to pre-install Google apps from using any version of Android not approved of by Google (Android forks, in jargon).
Since abuse of dominance is an integral part of the remit of any competition, levying a fine seems the most obvious course. Yet, it has to be recognised that competition issues are hardly as black and white anymore, and it is difficult to immediately see how consumer interests—also at the heart of competition abuse—have been adversely affected. Indeed, since Google’s services become better as more and more people use its products, trying to break that up—as EC is trying to do—is not intuitively pro-consumer; when a Gmail or a Map is available free, it is, in any case, more difficult to argue that consumers would be better served if the phones they use didn’t have these apps pre-installed.
Also, as Google CEO Sundar Pichai argues, Google’s development of Android has resulted in there being 1,300 brands powered by Android, 24,000 devices at every price point—and each can run the same applications—and more than a million apps on Play Store. This, Pichai asserts, is due to the rules Google has put in place to ensure technical compatibility, and the billions of dollars it spent to develop Android. Surely the resulting consumer welfare from this—phones cost more in the pre-Android era and had less features—has to be balanced against the potential loss due to the restrictions
EC talks of? EC says the pre-installation causes a ‘status quo bias’ and if they are not addressed, the fines will go up to 5% of Google’s global turnover. By way of evidence, EC says 95% of all searches on Android devices (which have Search and Chrome pre-installed) are made via Google Search as compared to 75% of all searches on Microsoft mobile devices taking place using Bing (which is pre-installed on Microsoft devices). Google’s reply to this, however, is also quite convincing, that typical Android users install about 50 apps themselves and that browsers like Opera Mini, Firefox and UC Browser were downloaded more than 600 million times last year.
This may be a small proportion of those using the Chrome browser, but it is important to ask whether Microsoft’s Internet Explorer died because of US anti-trust action or whether this was due to browsers like Chrome being better or, if pre-installation was so important, why is Google’s Allo struggling against a WhatsApp; in other words, are competition authorities guilty of ignoring the impact of technological advances? It is not clear if Google will stop the practices EC has highlighted, but if Chrome has a 60% market share in browsers, and Search around 90% in all search engines—according to The Verge—it is not entirely clear how much the EC’s unbundling proposal will change things if users give default status to the apps they prefer using. Consumers will have an additional problem if, as Pichai hints, the EC move results in Google charging for Android technology or if, as he says, this sends a “signal in favor of proprietary systems over open platforms”.