Earlier this month, EU competition chief Margrethe Vestager ordered Google to stop promoting its own search engine and apps on smartphones through its Android operating system, and issued a record $5 billion fine. Regulators say that bundling Google apps on Android devices undermines Google’s competitors. Vestager says Google will face additional fines if it doesn’t “bring its illegal conduct to an end” within 90 days.
The company has long required that Android device makers such as Samsung, Motorola, and LG set Google’s search engine, and Google’s Chrome browser as defaults, in order to gain access to the company’s app store. The European Commission also said the company had paid phone manufacturers and network operators to install Google apps on phones before they were sold, and stopped manufacturers from selling devices using alternative versions of the operating system.
“Google has used Android as a vehicle to cement the dominance of its search engine. They have denied European consumers the benefits of effective competition in the important mobile sphere.”
The fine is the largest ever issued by the commission, which Vestager attributed to the “seriousness and sustained nature” of Google’s actions. The $5 billion represents about 5 percent of the revenue of Google’s parent company, Alphabet. The EU also fined Google $2.8 billion in 2017 for giving its own shopping service priority in its search results.
Google said it will appeal the decision, and said in a statement:
“Android has created more choice for everyone, not less. A vibrant ecosystem, rapid innovation and lower prices are the classic hallmarks of robust competition.”
Google’s dominance has certainly become entrenched in a wide variety of areas. According to the Commission, 80 percent of smartphones, not only the EU but worldwide, use Google’s Android system. In most EU member states, Google accounts for over 90 percent of the search market.
But is this antitrust fine the best way to address this? For one thing, it should be mentioned that keeping a closer eye on mergers would do much more to stop companies from becoming as ubiquitous as Google in the first place. Now, even if the apps and search engine are no longer set as the default on Android devices, people are likely to use them anyway since so many other users already are – this is called the network effect. Google’s 2006 acquisition of YouTube, for example, greatly reduced competition in the internet video market.
It’s also questionable how strong the Commission’s case really is, and experts on both sides of the Atlantic have questioned either the case itself, its potential to result in positive changes, or both. Also, singling out Google for practices shared by other tech companies does little to stamp out these practices overall.
Much of the case revolves around the assertion that preinstalling Google apps on Android phones gives the company a significant advantage. But unlike with an EU antitrust case against Microsoft in 2004, for preinstalling its Windows Media Player on Windows, today the situation is quite different. Unlike then, installing new, rival apps is now as easy as a single press on a touchscreen. It takes only seconds, unlike installing a video player on Windows in 2004, as James B. Stewart argues in a New York Times opinion piece. As that piece points out, Google’s photo app still struggles to compete against apps like Instagram, despite coming preinstalled on Android devices. Also, device manufacturers can opt to preinstall rival apps in addition to the Google suite.
Many of the practices that Google is coming under fire for are shared by other, admittedly less dominant tech outfits. Apple preinstalls a bundle of its own apps on its phones, and doesn’t even allow users to choose other apps as defaults in some cases. And many of its apps aren’t available to those not using iOS, which means a user considering switching from using iOS device would lose access to content such as the iMessage app. Amazon does not sell Apple TVs or Google Chromecast devices. Samsung’s Bixby assistant and other services come preinstalled on their phones.
EU rules stipulate that regulators need to show that a company is dominating its market in order to make a case against it, which means practices become standard across industries before officials even have the option to intervene. And regulators must draw arbitrary lines to define a market to demonstrate this dominance. In this case, it meant Google dominates the market for “licensable smart mobile operating systems,” which excludes Apple, despite the fact that these companies surely compete within the smartphone market.
Antitrust regulations are crucial, especially in the face of the unprecedented power and influence of tech companies. But for the moment, this system is broken on both sides of the Atlantic, and arbitrary moves aimed at the highest profile companies are not enough to protect consumers or prospective competitors from anti-competitive practices, a lack of transparency, or problematic handling of consumer data. Only consistent, across-the-board regulations, more in the vein of the EU’s recent General Data Protection Regulation, can disincentive dominant companies from abusing their power.