Google in the dock as EC investigates Android the Trojan Horse
Jun 14, 2013
Last month an alliance of anti-Google companies filed a competition complaint with the European Commission alleging that Google was abusing its position and using "deceptive conduct to lockout competition in the mobile market". The EC is already pondering Google's dominant position in desktop advertising and its alleged habit of favouring its own services in search results. Now its mobile activities are in the spotlight.
FairSearch.org is described as an international coalition of 17 specialised search and technology companies. Members include Microsoft, Nokia, Oracle, and a clutch of online players such as Expedia and TripAdvisor. They claim that Google is running a carefully crafted campaign to "dominate the mobile marketplace and cement its control over customer Internet data for online advertising as usage shifts to mobile," pointing out that Android is currently found on 70 per cent of smartphones shipped and that it also has 96 per cent of the search market .
“Google is using its Android mobile operating system as a ‘Trojan Horse’ to deceive partners, monopolise the mobile marketplace, and control consumer data,” said Thomas Vinje, Brussels-based counsel to the FairSearch coalition in the press release. “We are asking the Commission to move quickly and decisively to protect competition and innovation in this critical market. Failure to act will only embolden Google to repeat its desktop abuses of dominance as consumers increasingly turn to a mobile platform dominated by Google’s Android operating system.”
As is too easy to point out, the ink on Microsoft's EC settlement concerning its own abuse in the market is barely dry: that's seen as either ironic or even more reason for MS to ensure that Google gets an equivalent mauling, depending on the observer's sympathies.
The core of the complaint is around alleged Google duplicity in the way it has promoted Android as an open OS and bundled its range of services (app store (Play), email, search, YouTube etc) as part of the royalty-free package. There is no doubt that this business model has been highly effective, as the complaint alleges, giving the Android OS the dominant market share it now has while at the same time subverting the business models of competitors by locating the value position in the chain at least one level up from Microsoft (say) at the app store and ad platform.
The success of Android has then tended to hollow out the business models of those plying their business on the platforms (OS, applications, access) below.
The upshot, according to Micros... I mean FairSearch.org, is that by giving away Android while MS in particular is trying to ply its traditional business by selling its OS in the old-fashioned way, is unfair competition.
"Google achieved its dominance in the smartphone operating system market by giving Android to device-makers for ‘free.’ But in reality, Android phone makers who want to include must-have Google apps such as Maps, YouTube or Play are required to pre-load an entire suite of Google mobile services and to give them prominent default placement on the phone," the complaint says. "This disadvantages other providers, and puts Google’s Android in control of consumer data on a majority of smartphones shipped today."
It's perhaps instructive that, apart from Nokia, there's a complete absence of smartphone OEMs moaning about Google from the safety of FairSearch. Indeed, whatever the competitive dynamics now visible, Google was not duplicitous about this. OEMs taking the Google apps as part of an Android bundle was clearly seen as a reasonable quid pro quo. Take the bundle and win a free OS seems like a very reasonable offer.
And, Google may say in its own defense, there is no requirement for either an OEM or a user to take the full Android shilling. Amazon, for instance, has built a very successful business using Android with its own app shop. Failing that, Android users, once they've got their phone home and unboxed, are free to download and use whatever apps they like.
And, Google might conclude, if it's that illusive entity, a level playing field you're seeking, then Microsoft is free to bundle its own services in the same way on its own Windows platform, giving away the OS free to participating OEMs.
The point at issue, though, is likely to be whether that apparent cross promotion (between OS and the 'unfair' bundle requirement) is done from a position of monopoly strength. It seems that if you do it as a means of building market share, its alright. If you do it as a way to defend a dominant share once you've won it, it isn't.
We may therefore be seeing the beginning of the end of Google-the-Dominant, just as IBM and Microsoft were slain before it. The big difference is elapsed time. IBM rose and fell across about 40 years, Microsoft arguably across 30. It looks like Google might complete the cycle well inside 20.