EU accuses Google of using Android to skew market against rivals

The EU has accused Google of skewing the market against competitors with its Android mobile operating system.

Margrethe Vestager, the EU competition chief, said the European commission had taken the preliminary view that Google had abused its dominant position, following an initial one-year investigation.

“What we found is that Google pursues an overall strategy on mobile devices to protect and expand its dominant position in internet search,” Vestager said.

“The commission is concerned that Google’s behaviour has harmed consumers by restricting competition and innovation,” she added. “Rival search engines and mobile operating systems have not been able to compete on their merits. This is not good.”

The company has 12 weeks to respond to the commission’s charge sheet, known as a statement of objections. The full investigation is likely to last many months. If Brussels upholds the complaint, Google could be fined up to $7.4bn (£5.8bn), the equivalent of 10% of its global revenue.

Google has mounted a robust defence of its open-source Android operating system and argues that users are free to delete Google apps. In a statement the internet corporation said its business model “keeps manufacturers’ costs low and their flexibility high, while giving consumers unprecedented control of their mobile devices”.

Photograph: European Union

The inquiry marks another front against Google, after the commission opened a case against the California-based company for allegedly distorting internet search results to favour its own shopping service in April 2015. Microsoft and the travel website TripAdvisor had complained that Google was using its position as the world’s dominant search provider to give preference to its own shopping service. About 90% of web searches are made on Google.

A final decision on that investigation into alleged market abuse is expected later this year.

Other investigations into Google’s business model are also under way. The European commission is studying the company’s specialised search services, the copying of third-party content and advertising, but initial investigations are not yet complete.

The case against Android may be the most significant as it could force a radical change to Google’s business model by making it harder for the company to generate revenues from mobile ads, worth an estimated $11bn (£7.6bn).

The EU case against Android is centred on the concern that tablet and smartphone makers, as well as network operators, are not free to choose which search engines and browsers to install on their devices because of Google’s “unjustified restrictions and conditions”.

Since Google launched the Android operating system in 2008, it has come to dominate the smartphone market: almost 85% phones sold at the end of 2015 were running on Android, according to Gartner research, compared with just 13% running on Apple’s system.

Industry watchers said Google’s prospects of making money from advertising could diminish if apps were not pre-loaded.

The commission has spent a year investigating whether it should launch formal charges on Android. On Monday, when Vestager used a speech in Amsterdam to reflect on the commission’s battle with Microsoft, a 12-year campaign that eventually cost the American company €1.64bn in fines.

For tech watchers, the two cases have striking resonances. One of the main items on the charge sheet against Microsoft was the difficulty rivals had in getting apps into Windows software for a reasonable price. “If Microsoft’s media player was already there when you bought a PC, it would be hard to persuade people to even try an alternative,” Vestager said on Monday. “So innovators would be at a big disadvantage when it came to reaching customers.”

Both the Google and Microsoft cases were launched under the same chapter of the EU’s anti-trust rule book.

Speaking on Google, the Danish competition commissioner again stressed the threat to innovation was one of her main concerns. Vestager dismissed suggestions that the EU had an agenda against successful American companies.

“It is not our job to defend companies, it is our job to make sure that there is competition,” she said. “If dominance is abused then we have an issue and that has been the case.”

Kent Walker, Google’s senior vice-president and general counsel, said: “Android has helped foster a remarkable – and, importantly, sustainable – ecosystem, based on open-source software and open innovation. We look forward to working with the European commission to demonstrate that Android is good for competition and good for consumers.”

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