Google’s Android OS Antitrust Issues in the European Union

Google’s Android OS Antitrust Issues in the European Union

Google’s Android mobile operating system has faced several antitrust inquiries across the globe, including from antitrust regulatory agencies in the United States, Canada, South Korea, Brazil, India, and Russia.^[1] Google has also faced extensive antitrust inquiries stemming from their business in the European Union;^[2] which has given Google one of its strongest antitrust fights to date. In 2016, Google’s Android had a global market share of approximately 83.1% for smartphone operating systems.^[3] In Europe alone, the European Commission, the administrative agency tasked with enforcing EU antitrust policy, estimates that Google’s Android enjoys a market share of roughly 90%.^[4]

The European Commission launched its investigation into Google’s Android business practices and sent a formal Statement of Objections to the technology powerhouse in April 2016, alleging Google breached EU antitrust rules in three main ways.^[5] The Commission argued that by: (1) requiring device manufacturers to pre-install Google Search and its Chrome browser and by requiring them to set Google as the default search service, as a prerequisite to license certain Google apps, (2) prohibiting manufacturers from selling mobile devices running on different versions of the open source Android code, and (3) by providing these device manufacturers with financial incentives to manufacture and pre-install Google Search, Google has breached EU antitrust rules.^[6]

Google responded to the Commission’s Statement of Objections in November 2016, arguing that its argument that Android has stifled competition is not only incorrect, but in fact, it has expanded competition leading to a dramatic decrease in the price of smartphones through use of its efficient model.^[7] Google argued that the Commission did not accurately judge Android’s place in the market, arguing that Apple’s iOS is a real competitor with Android.^[8] Additionally, Google argued that the Commission did not correctly measure the extent app developers depend on the reliable Android framework. The anti-fragmentation agreements that Google enters into with manufacturers allows app developers to invest in new apps with the confidence that they will be able to run on the majority of smartphones in the market.^[9] Google also argued that by including Google Search and the Google Play Store on these devices, the company is able to offer more free services to its customers without having to charge them a licensing fee.^[10]

Google’s Android antitrust issue in the EU remains in limbo at the moment, with the Commission not expected to release a potential decision until late of this year.^[11] However, one thing that is certain is that the case could have significant ramifications for Google, both financially and for the future of their Android business in the EU. If the Commission decides to levy a fine against Google for the purposes of punishment and deterrence, they are allowed to fine as much as 10% of the overall annual turnover of the company.^[12] Microsoft, which had its own antitrust issues in the EU in past decades, has paid roughly $3.4 billion in fines to the European Commission.^[13] Though Google has responded to the Commission’s complaint, it has been argued that the company would have a better chance of getting a favorable result if it convinces the Commission to change the way it views all technology companies.^[14] While Google does play a prominent role in one aspect of the mobile operating system market, it may just be entering another part of the digital landscape. If Google can show how the market operates and where competition exists, perhaps the European Commission might be more flexible in the way it views Google’s Android prominence in the mobile operating system market.^[15]