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From Antitrust Law Daily, April 20, 2016

Google abused dominant position in three markets, EC claims

By Greg Hammond, J.D.

Google’s restrictions on Android device manufacturers and mobile network operators constitute an abuse of dominant position in three markets, the European Commission alleged in a Statement of Objections sent today to Google Inc. and its parent company, Alphabet Inc. The statement outlined the EC’s preliminary views that Google has breached European Union antitrust rules.

The EC claims that Google is dominant in the markets for general Internet search services, licensable smart mobile operating systems, and app stores for the Android mobile operating system, noting that Google has market shares of 90 percent or more in each of these markets in most EU Member States. In addition, approximately 80 percent of smart mobile devices in Europe and around the globe run on Android—Google’s mobile operating system, the EC asserts.

According to the EC’s Factsheet, Google breached EU antitrust rules by: (1) requiring manufacturers to pre-install Google Search and Google’s Chrome browser and requiring them to set Google Search as the default search service on their devices, as a condition to license certain Google proprietary apps; (2) preventing manufacturers from selling smart mobile devices running on competing operating systems based on the Android open source code; and (3) giving financial incentives to manufacturers and mobile network operators on condition that they exclusively pre-install Google Search on their devices.

“Based on our investigation, the Commission is concerned that Google’s behavior has harmed consumers by stifling competition and restricting innovation also in the wider mobile space,” Margrethe Vestager, EC Commissioner of Competition, remarked. “Today’s Statement of Objections finds that, as a result of Google’s behavior, rival search engines, mobile operating systems and web browsers have not been able to compete on their merits, but have rather been artificially excluded from certain business opportunities. This is worrying. It is one of my priorities to allow consumers to enjoy a wide range of innovative platforms, products and services online.”

Google’s response. Google Senior Vice President & General Counsel Kent Walker responded to the Statement of Objections, noting that “We take these concerns seriously, but we also believe that our business model keeps manufacturers’ costs low and their flexibility high, while giving consumers unprecedented control of their mobile devices.”

Walker outlined that (1) Google’s partner agreements are “entirely voluntary”; (2) if manufacturers do not commit to testing and certifying that their devices will support Android apps, the apps would not work from one Android device to the next; (3) manufacturers choose to load the Google apps suite to their device; (4) Google provides Android for free and offsets its costs through revenue generated on Google apps and services distributed via Android; and (5) it is simple for users to personalize their devices and download apps on their own.

“Our partner agreements have helped foster a remarkable—and, importantly, sustainable—ecosystem, based on open-source software and open innovation,” Walker commented.

Google has 12 weeks to respond to the Statement of Objections and also has the option to request an oral hearing.

Companies: Google Inc.

MainStory: TopStory Antitrust

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