Earlier this week, we reported on a source that indicated that Google was on the verge of being handed an antitrust suit by the European Commission. Today, the rumors came to fruition: the European Commission officially handed Google a “statement of objections” due to their belief that Google was in violation of EU antitrust statutes by abusing its dominant market position to restrict competition. Our previous report covered the gist of the argument laid out against Google, but to summarize:
“The basic gist of all the events leading up to the aforementioned charges starts off with the MADA (Mobile Application Distribution Agreement). One such MADA with Samsung is present here. The MADA dictates that in order to package a Google app in an OEM phone, they must include all of Google’s apps and services, as mentioned by Google. This usually extends onto the OEM decision to bundle the Google Play Store on Android, which is an open source OS. So, if you wish to put the Play Store on the device, you need to pre-install the rest of the application suite as well.”
In addition, as laid out in the official report itself:
“…if a manufacturer wishes to pre-install Google proprietary apps, including Google Play Store and Google Search, on any of its devices, Google requires it to enter into an “Anti-Fragmentation Agreement” that commits it not to sell devices running on Android forks.
…
Google has granted significant financial incentives to some of the largest smartphone and tablet manufacturers as well as mobile network operators on condition that they exclusively pre-install Google Search on their devices.”
What could happen if Google is found to be in violation? Google could face charges of up to $7.4b (about 10% of its revenue in 2015) and the ending of Google’s current alleged anti-competitive business practices. Such a finding could create a precedent that sparks similar suits across the world. Clearly, the allegations here are quite serious and the potential ramifications enormous for Google. The European Commission gave Google 12 weeks time to respond to the statement of objections before deciding how to proceed.
However, Google has wasted no time in responding to the Commission’s allegations and today has has issued a statement titled “Android’s Model of Open Innovation” laying out their argument for why their business practices are not anti-competitive. The statement is short, but it lays out some pretty clear arguments in defense of Google.
- First of all, Google states that their partner agreements are simply voluntary and that any OEM can build, modify, and ship Android as they please (and they’ve pointed to Amazon as an example of this).
- Second, Google argues that their Compatibility Test Suite is imperative for the health of the Android ecosystem as it is in the end-user’s best interests for apps to work flawlessly across the spectrum of devices on the market.
- Next, Google argues that the installation of Google services is entirely voluntary on the part of the OEM and that they can freely ship devices with pre-installed apps from third-parties (such as Microsoft or Facebook).
- Google then argues that it is necessary for them to bundle their Google services to offset the R&D costs for Android.
- Finally, Google argues that end-users are free to download and install new apps on their own, and they point to apps such as Instagram or Snapchat as examples.
Google’s arguments rely on the idea that bundling and usage of its services is not a necessity, however, the European Commission argues that the market pressure to pre-install Google’s apps basically kills any chance a third party can compete with Google on the search front. For now, Google is denying that OEMs are basically forced to bundle Google Apps in order to be competitive, and their strongest argument for why this is the case comes from the likes of Amazon who have successfully created their own ecosystem. The European Commission will need to prove that Google’s mandatory all-or-nothing Google Apps packaging stifles competition.
Did you find Google’s arguments compelling? Let us know your thoughts below!
Source: European Commission, Google’s European Blog
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