News & Updates

The EU's fight with Google

By James MacTavish / May 20, 2015

Google Antitrust1 2

A search for anti-trust infractions that yields no results

By now it may be common knowledge to hear the European Union is relentlessly pursuing an anti-trust fight with Google regarding their dominant position in search and mobile, and they leverage such market dominance. The EU’s argument is twofold:

  1. The EU claims that Google, who delivers 90% of search results in Europe, has influenced various searches consistently promoting themselves ahead of other companies.
  2. The EU is adamant on investigating Google’s tactics used to ensure Android device manufacturers bundle Google services, and how those services take precedence on the home screen of those devices.

Google has gone too long without someone coming to their defence. In opposition to the EUs case, I have outlined 5 reasons why Google should be cut some slack:

  1. European consumers have yet to complain which is very important. Generally consumers are pleased with Google as they have numerous free services including: email, maps, and storage. In addition, consumers find Google’s search to be far and away the best. This is a typical example of the EU interfering without cause, when consumers generally don’t share politician’s view of the world.
  2. I support the opinion that Google has created competition. Android came into play around the time Apple’s increasing dominance greatly intimidated the mobile industry. Had Google not invested copious amounts of money into Android when they did, I would argue that several mobile OEMs including Samsung would be in dire straights in the mobile space. Google invested in Android to give an open source free alternative contrary to Apple’s walled garden approach. In return, Android is now the dominant OS. This is a tribute to Google, not something to be slandered by the EU commissioners. My sources in Google have explained Google has never made a direct profit from Android. Additionally while it is accepted that Google has made a lot of money from Google Play apps, in-app billing, and mobile advertising served up by Android, Google’s support for the underlying Android OS has been solid and helpful to the industry as a whole.
  3. My company AppCarousel provides app stores across many sectors and devices, and Android continues to be a big part of our business. Manufacturers of devices based on Android can freely choose between the Google-bundled version (i.e. with Google Mobile Services including YouTube, Gmail, Maps and more) and the AOSP (Android Open Source Project) version which has no Google services. We are often asked by the AOSP manufacturers to add layers of value that Google isn’t providing. These layers include: an alternative app store to Google Play and other app management capabilities. We as a solutions vendor and our OEM customers, thank Google for creating new markets for us. Google has created a thriving ecosystem in which they play a big role, but have also allowed and encouraged the business development of others. Contrary to Apple’s closed app ecosystem, Google has proven to us that they are anything but restrictive.
  4. Supporting my previous statement, I can not stress enough how important the AOSP vs. GMS situation is for the industry. Should a device manufacturer want to make a new mass market device, Android will often be chosen as the operating system as it’s free thanks to Google. Better yet it can be offered with branded email, YouTube, mapping and cloud storage with the OEM offering Google’s GMS package for free if they like. If Google insisted that OEMs take all those GMS services, the industry would certainly question Google leveraging its dominance, and the EU would have a case. However that is not the situation. There is no denying Google makes loading up on those GMS items appealing, and does insist on certifying the device (and forces the Google icons to be prominent on the device) but the strategy is valid. I personally think it’s a fair compromise and do not believe it is a case of Google abusing its power.
  5. My friends in Europe feel that this fight is just as much geopolitical as it is technological and market driven. As originally stated, it is no secret that the EU thinks Google isn’t paying its fair share of taxes on profits generated in the EU. Regarding this anti-trust, the EU is capable of fining Google 10% of its annual revenues, resulting in $6 Billion windfall at a time when the EU needs to bolster its coffers.

To summarize, there is a harsh reality for Google should the EU win the anti-trust procedure. Google will be forced to change its search engine and open up its search world to further scrutiny and change, and Google Mobile Services will have to be completely unbundled from Android enabling OEMs to suppress Google services and replace them with their own, more easily than today. In response to these changes, customers who today enjoy a seamless Google experience will be left frustrated and disappointed. I believe this fragmentation will lead to the confusion of consumers, and will not benefit the app economy.