The case against Google: Tie breaker

TECH moguls look upon the European Commission with as much enthusiasm as does the average Tory MP from the English shires. Europe has no successful technology companies of its own, they whisper, which is why Eurocrats spend their time hassling American tech giants instead.

Not for the first time Google finds itself in the commission’s crosshairs. This week, the head of the EU’s trustbusting division, Margrethe Vestager, issued charges against the internet-search firm (see article). Its “preliminary view” is that Google is guilty of unfairly using its control of Android, the operating system that powers over 80% of the world’s smartphones, as a means to get its apps and services preferred over those offered by rivals. Europe trying to protect its own? Perhaps. Nevertheless, Google has a case to answer.

The commission’s claim has echoes of antitrust battles against Microsoft, which was found guilty on both sides of the Atlantic of trying to extend a monopoly in one area, the operating system for desktop computers, into others. The commission reckons that Google has a European market share of over 90% in three related areas: internet search, licensed smartphone operating systems and the distribution of apps for use on the Android platform via its online store, Google Play. Google is charged with using these near-monopolies to reinforce each other and also to extend its market power to other apps in its line-up. So if a manufacturer wants to pre-install Play on its handsets, it must also install Google Search as the default search engine. If it wants to license Google Search, it must pre-install Google’s Chrome browser. By “tying” its products in this way, Google can consolidate its market power.

This makes it harder for apps from Google’s current rivals (or by potential future innovators) to get a look in. Google claims there is no arm-twisting of manufacturers. Android is open-source software, it says. Anyone can use it without Google’s say-so. Handset-makers, such as Samsung, can and do pre-install apps of rivals, such as Facebook and Amazon, alongside those from the Google stable. Apple’s iOS, by contrast, is a closed operating system. But Apple’s slice of the smartphone market, though wildly profitable, is much smaller. In contrast, Google’s sway over Android gives it the power to crush rivals and, crucially, to entrench its position in search, where it currently has no strong competitors.

That power adds weight to a second charge by the commission, that Google is offering financial incentives to manufacturers to pre-install its search service on smartphones and tablets exclusively. A third charge is that Google does not allow manufacturers to use modified versions of Android on any of their devices if they want to pre-install the firm’s apps on one of them. If such restrictions were truly necessary to preserve the integrity of the Google-licensed version of Android, that might be good for consumers. But such conditions also seem to show that Android is a rather less open system than Google likes to claim.

Besmirched engine

Awkwardly for Ms Vestager, Canada dropped charges against Google the day before she unveiled hers. The European interpretation of competition does not hold much sway in America, where the prevailing view of its courts is that the power and profits that come with a dominant market position are simply the prize for success. Yet the need to reward Google has to be balanced against the need to inspire innovations that might complement Android or Google Search—or even displace them. It is now up to Google to demonstrate that its mobile strategy does not harm competition, and thus consumers.

Article source: http://www.economist.com/news/leaders/21697223-eus-case-google-has-abused-its-dominance-mobile-operating-systems-has-merit-tie?fsrc=rss

Comments

Powered by Facebook Comments

Leave a Reply

Your email address will not be published. Required fields are marked *