Antitrust: Google Android

The European Commission announced today that it has fined Alphabet, the parent company of Google, $4.34 BILLION Euros for abusing its mobile smartphone market dominance to boost the Google search engine business. Android, the Google smartphone operating system, is run on 85.9% of smartphones. 

The European Commission has three major points: 

1. Google requires manufacturers to preinstall search and browser apps if they wish to also preinstall Google’s app store (Google Play).  
2. Google shares revenue from search results with manufacturers and telecom carriers to incentivize them to not preinstall alternatives. 
3. Google stifles development of rival operating systems based on the open source Android platform. If a manufacturer releases a phone with a version of the Android operating system not made by Google, they lose the right to bundle Google Play (app store) or search on any of their devices. 

Easy to overlook when considering the first charge is that alternatives to the Google Play (app store) already exist in large numbers. This includes app stores from Amazon and Samsung that can be downloaded and installed on an Android device. Additionally, Google Play isn’t available in China and alternatives are the default in that country. In 2017, alternative app stores in China generated an estimated $35 BILLION USD. 

The last two charges focus on how manufacturers and carriers were financially incentivized to bundle Google apps and to not offer alternatives. The European Commission used Amazon’s difficulty to find manufacturers for its Fire operating system as the example of how Google used its market dominance to prevent competition.  

Amazon isn’t the only major tech company involved. FairSearch.org, a lobbying group that includes Oracle, initiated this case against Google in 2013. Microsoft, the target of its own antitrust regulations in Europe, was also a part of Fair Search and the case against Google. 

Microsoft had its own 2004 European Commission fine for bundling Media Player with Windows. Five years later (2009), European regulators pressured Microsoft to also unbundle the Internet Explorer web browser that came with its Windows operating system.  

In both cases, Microsoft did not prevent a consumer from downloading and using an alternative. Similarly, Google does not prevent a consumer from downloading and running alternatives to Google Play, Chrome, or its search engine. 

Locating and installing alternatives to bundled apps takes effort and it is that effort that appears to be the European Commission’s focus.  

No competitor has yet to develop a mobile web browser, app store, or search engine compelling enough to get a large number of Android users to take the steps to switch. Therefore, regulators are going to overcome this disinterest by forcing the selection onto the consumer. 

When announcing the landmark fine against Google, European Commissioner Margrethe Vestager summed up customer apathy as follows:  

“users simply take what comes with their device and do not download competing apps.”  - European Commissioner Margrethe Vestager

Consumers don’t care enough to select an alternative. That wasn’t enough to save Microsoft in 2004 or 2009 and it may not be enough to save Google in 2018.  

Assuming Google does not win its appeal, Android of the future will likely prompt customers to select an app store, browser, and search engine. Seemingly lost is the irony that customers already have the freedom of choice today.