Friday 20 July 2018

Reflections on Google after Android


Reflections on Google after Android



The European Commission has now issued its decision in the latest abuse of dominance investigation into Google’s business practices.  The Commission has imposed a record EUR 4.3 billion fine on Google attracting headlines worldwide.  Two days on from the decision, a few early themes are developing.



The theories of harm that the Commission has settled on are much closer to established case law.  The Commission finds that Google has acted abusively by unlawfully (1) tying its Search and Chrome browser applications by requiring smartphone manufacturers to pre-install these on Android devices if they also want to offer Google’s Play Store, (2) offering financial incentives to those manufacturers to exclusively pre-install Google Search, and (3) hindering the development of rival Android systems.



The fine represents a much higher percentage of worldwide turnover than in other cases and is larger than the EUR 2.4 billion penalty imposed just a year ago in the Commission’s Google Shopping investigation.  This is not surprising given the size of the relevant markets and the scope of the Commission’s findings in Android.



Google has understandably refuted the Commission’s case.  It says that the Commission failed to take sufficient account of competition from Apple’s iOS.  While there may be competition between Android and Apple at the retail level, this appears to miss the point.  The issue at stake in this case is whether Google had sufficient market power over smartphone manufacturers at the stage of pre-installation of apps and where important technology choices are set.  Apple does not license its iOS to manufacturers.



Questions remain as to the effectiveness of remedial measures and what form they will take.  To ask Google to stop the practices that the Commission has found to be infringing may not go far enough for some complainants.  It is not clear whether other apps might be in scope.



Although the Commission’s decision has settled the latest stage in this three-year long probe, there remain questions as to whether the outcome will deliver what rivals have been seeking in terms of levelling the competitive playing field.   The Commission launched its investigation in 2015, but significant complaints were made before then.  



The challenge for regulatory intervention in a technology environment is getting the right balance.  Consumers have grown accustomed to using Google services as default options.   The Commission faces no easy task in trying to overcome consumer acceptance of those products and services over the years.  Whether this is as a result of superior products and services - or as a result of the practices that the Commission has found to be problematic - depends on whether you are ‘pro-Google’ or not.  And views can be quite diametrically opposed.






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