Google’s motto is famously “do no evil” but an ever increasing number of the behemoth’s critics say the ad giant is using its ever-increasing dominance in mobile to hamper competitors.
In 2014 Android became the first smartphone operating system to ship more than one billion units in a single year, accounting for 81% of all smartphones shipped globally, according to Strategy Analytics. The closest competitor, Apple’s iOS, had just 15%. Microsoft‘s OS floundered with just 3%.
What many do not know is that there are two versions of Android: the open source version, AOSP or Android Open Source Project; and Google’s proprietary version. AOSP accounts for more than half of Android’s market share, according to Radio Free Mobile, an independent research provider.
It is the proprietary version, Google Android, that is angering opponents. They contend that OEMs are required to embed a growing number of Google apps and services as defaults on the phone and are prohibited from working with Google’s competitors.
As a consequence, companies looking to compete with the ad giant in the new digital advertising platform, mobile, are struggling to stop Google from establishing the same kind of dominance it has in search and online advertising markets.
Google’s behavior is curbing consumers’ freedom of choice and stifling innovation in the mobile sector, according to critics.
Esther Dyson, an investor and member of the board at Russian search engine Yandex, which filed an antitrust complaint against Google with the Russian authorities last month, says it is imperative that the mobile Web remains competitive.
“An initially benign government or a company, if they stay in power too long, continues to identify themselves with all that is true and right. It doesn’t really understand when they are behaving badly,” she says. “The Google version of this is that they have deals with third parties that restrict what they can do with Google’s competitors. It is fine to have exclusive deals when you are a start-up, but when you have a dominant market share it is not fair.
“The world that allowed the creation of Microsoft and Google could not have happened if IBM was running everything.”
The mobile sector now effectively has a duopoly between Google’s and Apple’s closed operating systems and “I think it is having a devastating impact on innovation,” says Juha Christensen, one of the co-founders of Symbian, which at the height of its popularity in 2006 had 64% of the global mobile operating system market. He now works with several Silicon Valley mobile and cloud start-ups.
EU Antitrust Already Investigating Google
Google may have to pay a price. Critics point to similarities to the Microsoft suit filed in Brussels in 1998. After ten years of legal battles Microsoft was forced to pay a €900 million fine and change its practices.
“I think Google is opening itself to legal scrutiny,” says Christensen. “When I was at Microsoft we were taught that it is not illegal to create a monopoly. What is illegal is to use one monopoly to create another.”
EU antitrust officials are already investigating complaints against Google that allege abuse of its dominant position both in search and on mobile. Yandex is requesting that Android be unbundled from Google search.
A European Commission investigation into Google’s search practices has been going on since 2010. Companies alleged that Google favored its own services in search results while reducing the visibility of results from competing sites.
A complaint against Google, filed to the EC in March 2013 by an industry group called FairSearch, focuses on Android. FairSearch, whose members include Microsoft, Nokia, Oracle, Expedia and TripAdvisor, contends that Google’s “anti-competitive conduct forecloses competition in the markets for mobile OS, various apps and related services and mobile online advertising.”
“The Openness Of Android Is A Myth”
An additional Android complaint was filed with EC antitrust authorities in June of 2014 by Aptoide, a Lisbon-based start-up and independent apps store for Android smartphones. The complaint contends that Google is leveraging its dominance to control the app store market.
“The openness of Android, which made the operating system so popular, is now unfortunately a myth,” Yandex said in a statement announcing that it had filed its own Android-related complaint in Russia.
The Yandex complaint echoes arguments made in the FairSearch 2013 filing, namely that Google’s mobile application distribution agreement (MADA) with OEMs requires any that wish to offer any of Google’s “must have” apps on their devices (such as YouTube) cannot license each app, but must pre-install an entire suite of Google apps called the Google Mobile Suite (GMS); in addition, a number of these apps must be provided as defaults and given prime placement on the device’s screen.
The different types of Google apps that must be preloaded on Android devices under the MADA are increasing over time.
Yandex says it has felt the pinch. “In 2014 Google stopped our long term partners Fly, ExPlay and Prestigio from pre-installing any of Yandex services on their mobile devices,” the Russian search engine said in a statement. “Google used their dominant position in one sphere (mobile operating systems and application stores) to promote their own services in other spheres (their search of maps, for instance, which are not the most popular services in Russia) without a possibility of an alternative.”
The FairSearch complaint claims Google has engaged in ‘bait and switch tactics’ by initially promoting Android as being open, but then progressively limiting its scope. “Google has all but frozen development of the open source version of Android called AOSP,” the complaint says, “and is expanding the development of the Google-proprietary Play Services layer that is only available for the version of Android that Google licenses to OEMs.”
Now It Is Microsoft Complaining About Google
The FairSearch complaint says, “OEMs and developers face a choice between being locked into Google Android, or being locked out of that most widespread mobile platform and access to Google’s apps in high demand with consumers such as the Play Store and YouTube.”
“Google is ensuring its services are placed prominently on the devices and are the defaults the device manufacturers are forced to use,” says Thomas Vinje, an attorney in the Brussels office of Clifford Chance, which represents FairSearch and also represented complainants in the EU Microsoft antitrust case. “This has essentially the same effect on the market and on the consumer as the behavior of Microsoft when it was condemned by the European Commission.”
“Now it is Microsoft complaining about Google,” says Vinje. “There is quite a lot of irony here as Google was amongst the most voracious critics of this sort of behavior when it was undertaken by Microsoft and now Google is going to much greater lengths with considerably more serious consequences for consumers in areas and markets of much greater importance that those that were affected by Microsoft.”
The Commission’s antitrust directorate, now headed by Margrethe Vestager is still in a fact-gathering phase. If the Commission believes there is a case it will announce a formal investigation.
Google did not respond to repeated requests for comment from Informilo.