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Summary

The European Commission has instigated an antitrust investigation into Google relating to the company’s Android business practices. The action taken by the Commission follows a preliminary investigation conducted of its own volition, which suggests that there is evidence to indicate that Google may well have abused its dominant position in the mobile market and hindered fair competition within the European Union.

The European Commission clearly thinks that Google’s tight control of the Android ecosystem stifles competition and harms consumers

Announcing the formal investigation into Google’s Android business practices, the Commissioner in charge of competition policy, Margrethe Vestager, said: “Smartphones, tablets and similar devices play an increasing role in many people’s daily lives and I want to make sure the markets in this area can flourish without anticompletive constraints imposed by any company.”

The sentiment of the Commission’s statement brought about a sense of déjà vu, as a decade ago Microsoft fell foul of competition law within the EU when it was adjudged to have wielded its monopolistic powers illegally. As a result, Microsoft had to change the way it bundled its products, licensed the Windows operating system, and conducted business in the region. If a precedent has been set, then Google may have to unbundle some of its key services, such as Chrome, Gmail, Google Maps, and Google Docs, and provide consumers with more choice, just as Microsoft was forced to do in the desktop era.

The Commission’s investigation into Google’s Android business practices will focus on three key questions:

  • Has Google illegally hindered the development and market access of rival mobile applications or services by requiring or incentivizing smartphone and tablet manufacturers to exclusively pre-install Google’s own applications or services?
  • Has Google prevented smartphone and tablet manufacturers that wish to install Google's applications and services on some of their Android devices from developing and marketing modified and potentially competing versions of Android (so-called “Android forks”) on other devices, thereby illegally hindering the development and market access of rival mobile operating systems and mobile applications or services?
  • Has Google illegally hindered the development and market access of rival applications and services by tying or bundling certain Google applications and services distributed on Android devices with other Google applications, services and/or application programming interfaces of Google?

This new investigation comes on the back of an existing antitrust case relating to Google’s favoring of its own comparison shopping product in its general search results page. Google has to convince the Commission to the contrary or change its business practices in Europe. It looks like 2015 is going to be a challenging year for Google in the EU, and the Commission’s Android investigation is likely to spark fresh debate in the US too.

Appendix

Author

Richard Edwards, Principal Analyst, Enterprise Mobility & Productivity

richard.edwards@ovum.com

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