Europe files formal antitrust objections against Google over Android

Google’s European woes entered overdrive today with the news that Europe is formally filing objections against the Internet giant over anti-competitive practices relating to its Android operating system.

Europe’s commissioner for competition, Margrethe Vestager, held a press conference this morning to confirm what has been expected for some time. “It is our view that Google has abused its dominant position,” she said. Today’s news comes as little surprise; earlier this week Vestager gave the strongest hint yet that Android was firmly in its crosshairs, saying:

Our concern is that by requiring phone makers and operators to pre-load a set of Google apps, rather than letting them decide for themselves which apps to load, Google might have cut off one of the main ways that new apps can reach customers.

Today, Vestager — using the Twitter for iPhone app — took to the social network to file a formal statement of objections against Google.

Statement of Objections to Google: It seems like you are abusing your dominant position by imposing restrictions on Andriod device makers.

— Margrethe Vestager (@vestager) April 20, 2016

For background, way back in May of last year the European Commission (EC) formally accused Google of using its dominance to bias search results, the result of a four-year investigation into the matter. At the same time, the EC revealed it was launching a second probe into Android relating to the way it allegedly forces phone makers to pre-install certain apps. The Commission said it would assess:

If, by entering into anticompetitive agreements and/or by abusing a possible dominant position, Google has illegally hindered the development and market access of rival mobile operating systems, mobile communication applications and services in the European Economic Area (EEA).

The crux of the complaint is that Google stymies competition by forcing manufacturers to bundle some Google apps, including Gmail, Google Search, and Google Play, on Android phones. Google has long argued that manufacturers are free to do as they please with the operating system, and are not forced to pre-install anything. This is correct, to a degree, but it’s not quite as simple as that. Android’s code is released under an open-source license, meaning anyone can use it — Amazon has done just that with its Kindle Fire tablets, creating an Android “fork” and bundling its own services with the tablet. But if a manufacturer wants to use Android and pre-install the aforementioned Google apps, it must use the whole suite — it can’t just offer Gmail and Google Maps while omitting Google Play and Google Search, for example.

So far, so simple. But some of the concerns extend beyond that, and there have been allegations that Google actively pays mobile phone makers to pre-install Google’s own apps and prevent them from using rival apps, though Google denies the existence of such “contracts.”

Today, however, Vestager said that Google “provides financial incentive” for manufacturers to pre-install Google Search and set it as the default search engine, and that this has prevented phone makers from exploring alternative search engines. “Google’s behavior has harmed consumers by stifling competition,” said Vestager. Later, during a Q&A session, Vestager elaborated on what this financial incentive entails — saying that it specifically relates to revenue sharing.

There have been a number of complaints from various parties leading up to today — back in 2014, a Portugal-based Android app store called Aptoide filed a complaint with EU regulators that said Google was abusing its position and was effectively forcing manufacturers to sidestep independent app stores in favor of Google Play. In the past, countless other companies — including Nokia, Microsoft, and Oracle — have lodged complaints against Google and Android in Europe.

Earlier this year, Google lost an anti-monopoly appeal in Russia over the exact same issue. Local rival Yandex had filed a complaint with the Federal Antimonopoly Service (FAS), and the FAS — perhaps unsurprisingly — ruled in favor of the local company. A court-issued statement at the time suggested that Google would have to rewrite its contracts with manufacturers and even pay a fine, as per the initial FAS findings. And in the U.S., Google is facing a similar probe, though no formal inquiry has commenced as of yet.

As for the EU charges, there is a long way to go, and Google won’t take this lying down. Google is already involved in another antitrust case in Europe regarding its dominance and control over its search engine, and this issue shows little sign of being resolved after more than five years. It’s likely that the Android antitrust case will linger too, but despite substantial lobbying efforts, today’s move could signal the start of Android’s great unbundling.

However, Vestager was quick to stress that today’s motion was an interim statement of objections. Google has three months to respond, and Vestager said the Commission was open to discussions with both Google and its parent company, Alphabet.

The elephant in the room here, of course, is Apple. The Cupertino company is arguably far more restrictive than Google in terms of what can be installed on iPhones and iPads. But Android dominates the mobile phone market, which the Commission cites as one reason Google is of particular concern:

Google’s market shares in the EEA for licensable mobile operating systems exceed 90%. Android is used on virtually all smartphones and tablets in the lower price range, which are bought by the majority of customers.

But perhaps more importantly, there is one key difference between how Google and Apple operate their respective mobile ecosystems: “Apple does not license its operating system,” said Vestager. In other words, Apple can control what is installed on its own devices, just as Google can with its own range of Nexus devices. But if Google requires that third-party manufacturers install Google Search and Google Play if they want to access other Google apps, well, that’s tantamount to abusing its position.

Google has now responded to the antitrust complaint, stating: Our Android business model benefits phone makers and consumers.