FairSearch Google Android Decision press pack 18 July 2018

On the Google Android Decision 18 July 2018

Table of Contents

FairSearch: European Commission Android decision will foster competition.

Case AT. 40099 – Google Android – Glossary.

FairSearch FAQ – Android Decision.

Overview of Android Complainants.

FairSearch on-record background: the Google Android case.

FairSearch: Android-Entscheidung der Europäischen Kommission fördert Wettbewerb.

La decisión de la Comisión Europea sobre Android fomentará la competencia.

FairSearch: Décision de la Commission européenne Android favorisera la concurrence.

FairSearch: European Commission Android decision will foster competition

• Google Android decision may help restore competition for apps, operating systems
• Principles should apply to smart TVs as well as smart phones
• Helps promote competition and innovation vital to digital economy

Brussels, July 18, 2018 – FairSearch said a European Commission decision on Wednesday will help restore competition in mobile operating systems and apps vital for the digital economy, by requiring Google to end abuses arising from its control of Android.

“This is an important step in disciplining Google’s abusive behaviour in relation to Android”, said Thomas Vinje, counsel to FairSearch. “It means that Google should cease its anticompetitive practices regarding smartphones, but also in other areas – smart TVs, in particular — where it is foreclosing competition by using the same practices.”

Google Android is the most widely used operating system in the world, running on 80 per cent of the world’s smartphones, and its use is spreading to other devices. FairSearch alerted the European Commission to the Google Android abuses in a complaint filed March 2013, triggering the Commisison investigation.

“The complaint dragged on for five years because Google used every trick in its book to delay action,” Vinje said. “FairSearch is satisfied finally to see these anti-competitive practices prohibited”.

The decision requires Google to end the tying of its apps together, its prohibition of open source versions of Android, and its payments to phone manufacturers ensuring exclusivity of Google Search on Android devices.  Phone manufacturers will now have freedom to offer their users differentiated devices with innovative third party operating systems and apps.

BACKGROUND

The conduct condemned today has enabled Google to commandeer the majority of data that users generate by using their phones.  Google’s voracity for user data drives the anticompetitive behaviour at issue in the decision.

Google is at its heart an advertising company.  It generates vast profits by scooping up unparalleled information about phone users and monetising it by using it to target advertising to those users.  By ensuring that the operating system, nearly all the key apps, and other important sources of data about phone users are in its own control, Google has amassed unparalleled amounts of data, giving it a huge data advantage.

This in turn has enabled Google to dominate online advertising and ensure that others cannot compete in this sphere.  As advertising is a major source of revenues for most online innovation, consumers are deprived of innovation as Google starves potential competitors of the resources to innovate.

This is what today’s decision is really about: Google’s anticompetitive conduct identified in today’s Decision, namely forcing of bundles of Google apps onto original equipment manufacturers (OEMs), and its restrictions preventing competition to Google Android and Search from emerging, is aimed at keeping control of ways to collect user data, and taking ever more data about users and their lives.  While Google’s abusive practices have entrenched its monopolies in licensable mobile operating systems, critical apps and other sources of user data, we can still hope that today’s decision will open the market for competition and innovation.

Vinje, partner at Clifford Chance, said:

“The Commission has done an incredibly thorough job collecting evidence and setting out the infringing conduct based on established EU competition law principles. And especially as a complainant in the Microsoft Browser Tying case, Google should have known better than to tie a collection of apps to its monopoly Google Search and Play Store.   As the complainant, FairSearch is obviously happy to see the case brought to a conclusion with a strong infringement decision.  It’s an important step in disciplining Google’s abusive behaviour in relation to Android.  This should mean that Google should cease its anticompetitive practices regarding smartphones, but also in other areas – smartTVs, in particular — where it is foreclosing competition by using the same practices.   Failing changes in Google’s behaviour however, further enforcement action may be necessary to end Google’s leveraging of its mobile dominance to increase its data hegemony.”

Members of FairSearch also commented:

Kenneth Glueck, Oracle Senior Vice President:

“The Commission’s decision will undoubtedly unleash more choice for mobile customers, more opportunities for mobile developers, new business models for mobile advertisers, and more robust competition in mobile technology.  This decision is unquestionably a win for consumers and applications developers.”

Shivaun Raff, CEO of Foundem:

“Fines make headlines.  Effective remedies make a difference.”

Alfonso Gutierrez, president of CEPIC:

“This is very positive news for the ecosystem. Thanks to anti-trust policy, Google is forced to pay in an effort to bring more fairness in an unbalanced system. We have to pursue these efforts, in all areas – Images should not be forgotten!”

Contact:

• David Lawsky, +322 613 2824, mobile +32 472 91 47 48, press@fairsearch.com
• secretariat@fairsearch.org

About FairSearch.  FairSearch is an industry association united to promote economic growth, innovation and choice across the Internet ecosystem by fostering and defending competition in online markets, to the benefit of consumers.  In execution of its mission, FairSearch is an active participant in various European Commission investigations involving Google.  Find out more at www.fairsearch.org.

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Case AT. 40099 – Google Android – Glossary

AFA: Anti-Fragmentation Agreement – Google requires device manufacturers and mobile network operators to enter into the AFA agreement if they would like to license Google proprietary apps such as Google Play and Google Search.  The agreement prohibits device manufactures from selling devices that run on an operating system derived from open source Android and not obtained from Google. Similar AFA provision are also imposed on app developers.

Android Fork: An operating system derived from AOSP.

AOSP: Android Open Source Project – the open source code of the Android operating system.

App: Abbreviation of “mobile application”

API: Application Programme Interface – in essence, APIs allow software programs and hardware, or different software programs, to communicate with each other.

GMS: Google Mobile Services, i.e., the bundle of Google apps and services that Google licenses together.

GPS: Google Play Services, i.e., the proprietary software layer that provides background services and APIs for apps integration with Google’s proprietary services such as Google Maps, YouTube and Google Location Services.

MADA: Mobile Application Distribution Agreement – the agreement Google requires device manufacturers and mobile network operators to sign in order to obtain access and distribution rights to Google mobile apps and services.  It requires device manufacturers and mobile network operators to license the Google applications and services as a bundle and contains an anti-fragmentation provision that supplements the AFA.

MNO: Mobile Network Operator – examples include Telefonica or T-Mobile.

OEM: Original Equipment Manufacturer, i.e., the device manufacturer.

OHA: Open Handset Alliance, an alliance of 84 of the largest OEMs, contract manufacturers, MNOs and service providers created at the occasion of the launch of Google Android, which aims to promote Google Android.  All members of the OHA have signed an AFA.

OS: Operating System, i.e., the low-level software that supports a computer’s basic functions, such as scheduling tasks and controlling peripherals.

SO: Statement of Objections – a formal step in European Commission antitrust investigations in which the European Commission informs the parties concerned in writing of the objections raised against them.  It is roughly comparable to a government complaint in a U.S. antitrust proceeding.

UI: User Interface

FairSearch FAQ – Android Decision

1. What is the legal basis for the Decision? Is the European Commission exploring new legal ground?

• The Decision finds Google abused its dominance in multiple ways related to Android and Android apps, and thereby infringed Article 102 TFEU.
• We understand that the Decision is based on basic EU law on abuse of dominance, including the law on tying and exclusivity. While the Decision may address new facts, the law is well-established.

2. Is there a relationship between the Google Comparison Shopping case and the Android Decision?

• There is no direct relationship, other than that the Android case includes an allegation that Google abused its monopoly position in general search, as is also the case in the Google Comparison Shopping case. Another way in which the two cases are related is that Google’s ultimate objective is to consolidate and extend is vast pool of data, which Google uses to sell advertising.  By cementing its position in comparison shopping services and mobile operating systems, applications and search, Google ensures that it continues to have more monetizable data for advertising than anyone else.  Data from comparison shopping services provides Google with purchasing intent data, whereas data from Android, Android apps and mobile search provides Google with a broad range of types of data (location, characteristics, viewing habits, interests,…) from devices that are essentially “always on” and which Google can combine in marketable “superprofiles” of users.

3. To what extent is this a case about big data?

• As noted, Google’s anticompetitive conduct is driven by an insatiable thirst for data that it can monetize to sell more targeted advertising. Google is at its heart an online advertising company and makes huge profits by having a very significant data scale advantage.  The fact that it has so much data that it can use to sell advertising is what drives its success.  Google made Android available for free to OEMs in order to drive adoption and ensure it would control the software platform on mobile devices, which it could use to collect data from users and drive adoption of more data gathering apps and services.  By tying applications together and mandating their prominent placement on the phone, Google ensures that a large number of Google apps are present on all mobile phones so that users are likely to use them and provide their data to Google rather than to its competitors. By preventing OEMs from using competing operating systems based on Android through its AFAs, Google indirectly secures user data for itself, by essentially ensuring users use Google’s Android and Google applications.  Through its exclusivity payments, Google again ensures access to user data obtained through mobile search on Android devices.  Ultimately, Google’s anticompetitive conduct allows Google to maintain and increase its data scale.

4. How does the Decision differ from FairSearch’s original complaint in 2013?

• The Decision is unlikely to address our complaint about predatory leveraging of Android (the fact that Google is offered for free, while it costs hundreds of millions if not billions of dollars to develop, which Google finances through its search advertising monopoly). The Decision likely will not not say anything about it either way.
• The Decision is unlikely to address tying of other apps with the Play Store and Google Search other than the Chrome browser. FairSearch had complained about the tying of other apps.  However, we are hopeful that the remedy will not to be limited to browser apps alone as it prohibits Google and Alphabet from adopting any practice or measure having an equivalent object of effect, including measures that would penalize or threaten OEMs in a manner that relies on other Google apps.
• In any event, we expect that the Decision will adopt FairSearch’s complaints core proposition that Google’s tying, anti-fragmentation and exclusivity provisions, driven by Google’s thirst for monetizable data, constitute abuses of Google’s dominant positions.

5. How can Google be seen to have a dominant position in a market where Apple and its operating system are so successful?

• It is worth noting that the Google “Android” Decision is to a large extent not about Google leveraging its (Android) dominant position in the licensable mobile OS market, but about Google leveraging its dominant position in the Search and Android application stores markets (e., Google Search and the Google Play Store).
  • Google’s dominance in relation to Android plays a role in relation to Google’s imposition of anticompetitive restrictions on the use of the open source Android OS (the so-called anti-fragmentation obligations or AFAs), but the other abuses relate to the conditional licensing and tying of various apps and related services together (not with Android), and ways in which Google illegally gives a leg up to Google Search (by setting it as default and making payments to OEMs and MNOs not to pre-install competing services)
• Insofar as the decision does refer to Android’s dominance, it relates to Google’s dominance in the market for licensable operating systems for mobile devices. This is a distinct market from the market for mobile devices (hardware), on which OEMs compete.  On the market for licensable operating systems for mobile devices, OEMs, not end users, are the customers.  Apple is not active on this market, because it does not license its operating system to third parties, nor does it have any plans to do so.
• Google argues that its actions regarding the Android operating system are constrained by downstream competition on the market for devices from Apple; however, FairSearch has submitted evidence to the effect that Apple devices do not constrain Google’s actions in relation to Android to any significant degree.
• In any case, Google’s Android OS is dominant even if one assumed iOS to be in the same market. Publicly available market share data indicates that Google is dominant: in June 2017, Google Android held a worldwide market share of over 64%, up from below 30% in 2010.

6. Isn’t Android OS an open source operating system? Does that not mean that anyone could come up with a competing operating system so that there really can’t be a competition problem?

• The short answer is that Android is not really open source, and that Google’s prohibition on OEMs making devices that use another version of Android is part of what the Decision found to be illegal. Google is by its own design the only viable supplier of Android, and Google’s dominant share of licensable operating systems, or even all operating systems combined (including Apple’s iOS), is growing.
• Upon the launch of Android in 2008, Google announced with much fanfare that Android would be “the first complete and highly functional, mass market, Open Source mobile platform.” The open source Android operating system is called Android Open Source Project or AOSP, and it is still available under an open source license.  However:
  • As a preliminary matter, AOSP as an open source project is flawed. There is little or no community input, and Richard Stallman, President of the Free Software Foundation, has pointed to the variety of shortcomings of Android that fail to qualify it as a truly open source project.
  • More importantly, Google does not develop AOSP in any significant way anymore. It has developed Google Play Services (not to be confused with the Play Store) as a proprietary software layer on top of AOSP, depreciated a lot of the functionality in AOSP itself, and focused all new development including new features on Play Services, which are not open source and only available as part of the bundled licensing from Google.  As a result, AOSP is commercially unviable as an OS as is, without the proprietary Google Play Services software layer.
  • In addition, Google disseminates Android updates to users only through the Play Store: if users want an up to date version of Android, they need the Play Store, which means OEMs supplying them with phones need to license Google’s entire bundle of apps.
  • Furthermore, Google through its anti-fragmentation provisions prevents OEMs, MNOs, contract manufacturers and others from developing or distributing operating systems that take advantage of the open source nature of AOSP and are developed as a derivative thereof, or to distribute any devices based on such operating systems. Because virtually all of the major industry players are held by Google to an anti-fragmentation agreement, no one can actually take advantage of the open source nature of Android:  Android is open source in name only.  The very concept of open source software is that anyone should be able to develop forks and derivative works.  In contrast, Google actively hinders the possibility of forking of Android in a way that could lead to the fork becoming a viable OS competing against Google Android.

7. Google says it does not tie any applications with Android, and that its case is very different from the Microsoft If so, what has Google done wrong?

• The conduct in Microsoft and this case (as far as imposing a bundle of apps is concerned, leaving aside the anticompetitive fragmentation obligations and exclusivity payments) is essentially the same, even if the products involved are different. Microsoft tied applications to its monopoly operating system.  Google ties its applications to its monopoly Google Search and Google Play Store rather than the OS (Android) as was the case for Microsoft – but those are still ties.  Google still makes Android available separately from the applications, but the applications themselves are only available as a bundle, and not separately from the Google Play Store or Google Search.  The infringement lies in the imposition of a bundle of different apps, rather than the tying of apps to the operating system.
• Thus, if an OEM wishes to pre-install even a single Google app such as the Play Store, it must pre-install a number of Google apps, including those for which there are (potentially better) alternatives from competing providers.

8. Why is there a problem with the MADA if users can and widely do download and install apps of their choice?

• Some of the significant challenges of any mobile applications developer on a competitive market are a) being found and installed by users and b) gaining the distribution scale necessary to be viable as a business. The MADA ensures that all the Google applications will have a distribution advantage in terms of being installed on all Android mobile phones that is unmatchable by any third party applications developer.  No matter how much money a particular developer pays to an OEM for preinstallation alongside Google’s applications, they will not be included on the devices of other OEMs, not necessarily in a similarly privileged position, and only at significant cost that Google avoids entirely.  Distribution scale is critically important particularly as many apps are dependent on advertising and in-app purchases to generate revenue.  The more an app is widely distributed, the more an app will collect monetizable data for advertising and be attractive to advertisers, and the more it will attract in app purchases.
• In addition, the preloading and placement requirements imposed by the MADA on OEMs makes it less likely that users will a) identify a need to find a third party app and look it up and b) install at third party app that does the same as the Google app.
• Third party apps cannot compete on a level playing field: before even the first download of their app third party developers start off facing Google’s app preinstalled on every phone.

9. Why can’t Google decide which apps it loads on its phones like Apple?

• Google could offer its own phones with Google applications loaded on it. Nothing prevents Google from doing so.  However, to the extent that Google licenses services and apps to third parties for which it is in a dominant position, based on EU law Google has a special responsibility upon it not to impair genuine undistorted competition, g., by forcing third party OEMs to load a bundle of apps in order to be able to offer the Google Play Store or Google Search on their devices.  Doing so risks foreclosing app providers who compete with Google in offering apps of the kinds included in Google’s bundle.

10. Aren’t OEMs entirely free not to take the GMS bundle?

• An Android phone is not of much use without applications available for it. OEMs will generally want to make an app store available to users, and Google Play is de facto the only credible app store, as it is by far the largest app store for Android with the most applications and the highest installed base share.  It is also the app through which Android updates are delivered.  As a result, OEMs will want to install Google Play Store. Even if there is no contractual obligation for OEMs to take the GMS bundle, if an OEM wishes to pre-install even a single Google app, such as the Play Store, it must pre-install the entire bundle of Google apps including those for which there are (potentially better) alternatives from competing providers.

11. Doesn’t fragmentation of the open source Android platform threaten the interests of the OEMs, MNOs, developers and, ultimately, users? Isn’t there a legitimate reason to impose restrictions on forking Android by virtue of the Anti Fragmentation Agreement or similar provisions in Google contracts?

• First, fragmentation is inherent to open source software. It comes with the choice Google made when it launched Android as an open source product (in the hope of achieving rapid adoption).
• Fragmentation is to some extent inherent to software as such – for example, new fragmentation is created with the release of every new version of Android.
• Despite Google’s own alarmist statements regarding fragmentation, Google itself has instigated the largest fragmentation of Android, by introducing Play Services and focusing development only on it, thus leaving AOSP with depreciated features. OEMs willing to take proprietary Play Services have the latest Android, whereas OEMs who do not want to take Play Services but only the open source AOSP are left with an emanciated OS, while being prevented from also offering phones based on Google Android in parallel without abandoning their AOSP offering, as a result of the anti-fragmentation obligation.
• Remarkably, fragmentation, portrayed as a major risk to Android’s success, and the actions that could result in fragmentation or cause it are not defined or identified in the anti-fragmentation measures. Their vague formulation allows Google to enforce it against a vast array of actions it could perceive as threatening.
• The anti-fragmentation measures in particular lead to a de facto, if not de iure, exclusivity of Google Android for OEMs who enter into the corresponding agreements. Google leverages its power in the mobile OS market as well as in the markets for mobile apps and services to prevent the development of any Android fork by limiting access to OEMs and app developers.
• The argument about fragmentation being bad is the same as the one Microsoft made (and the General Court rejected) about Windows Media Player: at the time Microsoft argued that untying Windows Media Player would cause all sorts of problems for developers, and in essence that it would be more convenient for developers to have a monopoly media player product. However “easy” it may be in the short term for OEMs, developers and users to have just one monopoly product, in the longer term, the lack of competition harms competition in a variety of dimensions including innovation, choice, security and data privacy.

12. Why should consumers care about this case especially as they get Android for free?

• It is a misconception that consumers get the Android operating system (or the Google applications) for free. Consumers buy devices on which Android is already installed, and even though they already paid for the device, they continue to pay for the Android OS and Google apps for the life of the device through the personal data they surrender to Google (regardless of whether they are online or offline) and which Google monetizes to generate advertising revenue.  The reason why Google provides Android and the applications for “free” to OEMS is to gain access to personal data of users in order to sell more advertising.  Indeed, the reason why Google entered the business of mobile operating systems in the first place is to increase its ability to collect personal, monetizable data.
• The limitations Google imposes on competition means consumers have fewer options of operating systems, and the ability of apps to compete with Google, generate revenue and innovate is reduced. These limitations also give Google more power to abuse users’ personal data.  Absent the restrictions identified in the decision, there would be more competition on a variety of dimensions of competition, including choice, innovation, security and data privacy.

Overview of Android Complainants

We know of five complaints filed with the European Commission on Android, and have no reason to believe there are others:

1. FairSearch filed on 23 March 2013. The theme of the complaint, which had differing effects on each member, was that Google used its dominance in the Android operating system to foreclose competition in mobile operating systems, mobile apps and to collect data to anti-competitively spread Google’s advertising monopoly.  The theories presented in the FairSearch complaint included those pursued in the Commission’s Statement of Objections.

2. Aptoide, the largest independent App store for Android phones: On 16 June 2014 the Portuguese company announced in a press statement that it had complained to the European Commission contending “that Google is leveraging its dominance in the Android operating systems for mobile phones to control the App Stores market. The App Market is worth an estimated USD 23 billion (ABI Research).”  A Wall Street Journal article quoted co-founder and CEO Paulo Trezantos as saying that Google had was “systematically setting up obstacles for users to install third-party app stores in the Android platform and blocking competition in their Google Play store.”

3. Disconnect Inc., filedon 1 June 2015. According to its website, the company manufactured software to block tracking by Android that protected personal privacy as well as halting threats of malware and identity theft. The company said that Google banned the Disconnect mobile application from its app store because Disconnect “interferes with Google’s revenue stream from invisible tracking,” and asserted that action “makes it all but impossible for Disconnect to innovate and compete effectively.”

4. Yandex filed on 13 Nov. 2015. Reuters reported that the filing by the Russian company in Brussels followed on its successful pursuit of a complaint in Russia. The Russian competition agency ruled in September, 2015, that Google broke the law by requiring pre-installation of its search application on mobile devices with the Android operating system. The Yandex complaint to the Commission expressed similar concerns. (FairSearch had independent verification of this filing).

5. Open Internet Project filed on 6 March 2017. Its law firm, Hausfeld, issued a summary of the statement, asserting that Google “creates significant barriers to entry for competing app developers and search services”. We’re not certain whether this directly affects their members, a list of whom can be found at http://www.openinternetproject.net/members/

FairSearch on-record background: the Google Android case

Introduction

FairSearch complained to the European Commission in 2013 that Google used its Android mobile operating system to spread its online advertising monopoly to phones. Since then Google has become as dominant on phones and tablets as on desktops and laptops, but violated the law to do it.

Google saw the rise of mobile coming long ago, posing a threat to its advertising business. Google therefore launched Android on smartphones in 2008, the year after the Apple iPhone went on sale. Apple had re-invented the mobile phone with a sleek, unique software design and colourful apps, which it refused to license to others. Google created an open source operating system that resembled the Apple design and gave it to handset makers, who installed the cost-free software in less-expensive products resembling iPhones. The phones were a huge hit.

Once Android was firmly established, Google transformed it into a proprietary system, and imposed rigid agreements on handset makers preventing them from selling any phones that did not comply with Google’s proprietary version of Android and requiring them to offer a particular set of Google apps. Any deviation would be punished, and no company was able to overcome Google’s power. Google used Android and its apps to scoop up information that precisely guided the targeting of ads, while denying that data to competitors. This is the story of how that happened.

Open Google

At the beginning, Google said that Android was anything but identical to Apple, because while the Apple operating system was closed and proprietary, Google Android was the opposite – open and interoperable:

“At Google we believe that open systems win,” an official Google blog said on 21 December 2009.

“Open technology includes open source, meaning we release and actively support code that helps grow the Internet, and open standards, meaning we adhere to accepted standards and, if none exist, work to create standards that improve the entire Internet (and not just benefit Google).”[1]

That sweeping policy statement had a short lifespan.

As phone makers became dependent on Android, Google changed course and abandoned the idea of open standards and interoperability.

Closing Android

Google introduced a proprietary software layer to Android known as “Google play services”. When Google then updated its apps, they stopped running on standard Android – they would run only if   Google play services was included on the device. Google warned users: “Apps may not work if you uninstall Google Play services.”[2] Google had dumped interoperable open standards and adopted the same approach as Apple, but while Apple makes it clear that its products are proprietary, Google still pretends to be open.

Google continued to claim Android was open, but that rang hollow. Not only did little (if anything) made by Google run directly on Android anymore, but any company that tried to take advantage of the remaining open source portions of Android found itself punished by Google.

The idea of open source is that anyone can use the code as a building block to design new and different software. A commitment to open source is a commitment to the imagination of anyone who wants to add something new – a commitment to a diverse universe, in contrast to a closed environment such as Apple’s closely-controlled one.[3]

Controlling handset makers

But one day Google decided to end so-called “fragmentation”. In doing so, Google broke the basic premise and promise of open source. Google said it was abandoning the differentiation (in Google’s pejorative characterization, the “fragmentation”) promised by open source to improve customer experience. It did so by imposing restrictive rules on phone makers, who by now depended on Android. Any company that offered any model running any variation of Android – a “fork” – would lose its rights to say its phones ran Android and lose its ability to include any Google apps on its phones.[4]

If even one model among a company’s many phones did not strictly comply with Google’s now-proprietary version of Android, Google would cut off everything.  The phone manufacturer would not be able to sell any phones running the only version of Android upon which Google’s must-have apps (and soon, most other apps) would run.  Nor would it even be entitled to license any of the Google mobile apps. In 2012 Google made an example of Acer, shortly before the debut of its CloudMobile A800, which used some of Android’s freely available open source code. When Google threatened loss of its licenses to Google’s proprietary Android code, Acer abruptly cancelled the launch event – turning away journalists at the door –  and killed the phone.[5]  Along with it died the very premise and promise of open source in the mobile sphere.

Smart phone users require apps. No company dependent on the Android marketplace running 2.8 million apps can afford to be cut off from that marketplace, marooned.

At the same time these restrictions began to bite, Google was conquering the smart phone market. The more Android phones there were, the more software writers designed apps for them, and the more variety was available in the app store for Android.

But these apps then ran only on Google’s by-then proprietised version of Android, as Amazon found in 2014 when it introduced the Amazon Fire phone — based on a fork of the Android operating system. Many Android apps wouldn’t run properly, and some not at all. Despite the resources of Amazon, including its depth and breadth of content, it could not compete. Amazon was forced to abandon its project, and today the Amazon Fire phone is defunct.[6]

Big advertising

Numbers tell the story: More than seven of every 10 smartphones among the 2.3 billion in use run Android,[7] making it the biggest operating system in the world. This gives Google a huge advantage, because smartphones and tablets have overtaken laptops and desktops as the most widely used paths to the internet.

The motivation behind the Google strategy is simple. Google is the most powerful advertising company in history, with billings of nearly $80 billion in 2016, and it wants to stay that way.  Users moved to smart phones, so Google moved too.

Like Microsoft in the 90s and oughts, and IBM in the 60s, 70s and 80s, Google succumbed to the temptation of using monopoly power to preserve and extend its position. That is why it gave away Android at no cost, and that is why it imposed restrictions carefully designed to make certain that advertisers used Google instead of somebody else.

Sucking up data

As we all know, Google dominates online advertising because it gathers huge quantities of data on its users. The more data, the more tailored the advertisements for consumers. It is to Google’s advantage to have as much data as possible about consumers, and to deny as much data as it can to competitors, so they cannot successfully target ads.

The Android operating system itself collects information on users, telling Google where the phones’ users are and what they are doing. Google maps, YouTube, search, and other apps also gather rich troves of data.

If Google can see someone is in an area looking for a restaurant, or a drycleaner, it can automatically serve up an ad for a local merchant. And Google collects information from phones whether or not people are using them, knowing where they are and, often, what they are doing.

Google requires mobile phone makers to put the apps it specifies on the phone, and the reality is that most people rely on pre-installed apps instead downloading new ones. Google’s apps are on every Android phone, while those of other companies are not. Google apps thereby have the advantage.

FairSearch complains

FairSearch filed a complaint saying that Google (i) requires phone makers to take the entire list of apps it specifies for distribution with Android — the process called “tying” –  through its Mobile Application Distribution Agreement (MADA); (ii) prevents manufacturers from selling smart mobile devices running on a forked version of Android by means of the Anti-Fragmentation Agreements (AFA); and (iii) effectively offers rebates to OEMs conditional on the exclusivity of Google Search. FairSearch told the European Commission that Google’s actions violated Articles 101 and 102 of the European Union treaties, which cover antitrust. Google is dominant in several markets, which gives it a special responsibility to avoid engaging in abusive conduct.

European Commission responds

The European Commission issued a Statement of Objections in 2016 declaring Google “dominant” for general internet search, licensable smart mobile phone operating systems, and the stores for apps that run on Android.[8]

The Commission noted that the more that consumers use an operating system, the more developers write apps for it, making it difficult for new competitors.[9] Among millions of apps available from the Google apps store, Google requires its own group of apps to be pre-installed on phones. The Commission said handset makers should have the choice of installing apps they choose, rather than those imposed by Google.

The Commission also said that Google has closed off innovation by barring handset makers from offering variations of Android – the “forks.”

If the Commission finds against Google, it may require, at least in part, that it adhere to the philosophy it espoused when Android was young: “Open systems win” – instead of merely using Android as a way to protect and extend its advertising dominance.

Remedies

The remedy to this conduct is quite straightforward: the Commission should prohibit contractual provisions designed to foreclose competition. To take but one example: the European Commission charged that Google breached European Union competition law by “preventing manufacturers from selling smart mobile devices running on competing operating systems based on the Android open source code.” The remedy is to prohibit contract clauses imposing such a prohibition, because they violate antitrust law.

While the Commission’s investigation’s focussed on the market for licensable operating systems for “smart mobile devices”, the anticompetitive harm is likely to go far beyond smart mobile devices.  As connectivity is added to substantially all innovative devices, the list of potentially affected devices (many of which run on mobile OS like Android), such as smart TVs and connected devices will only grow.  The EC’s remedy should anticipate these consequences and fully address them.

Other complainants and complaints

FairSearch filed the original Android complaint in 2013, and additional complaints were filed in 2014 by Aptoide, in 2015 by Disconnect Inc. and Yandex, and in 2016 by the Open Internet Project.

Android is one of three Google cases before the European Commission competition directorate. The European Commission found against Google in its shopping search site case in 2017, and is still considering a case about Google AdSense. AdSense sells on-line display ads and Google imposed restrictive agreements that hemmed in large carriers of online advertising such as online retailers, telecoms operators and newspapers.

About FairSearch. FairSearch is an industry association united to promote economic growth, innovation and choice across the Internet ecosystem by fostering and defending competition in online markets, to the benefit of consumers.  In execution of its mission, FairSearch is an active participant in various European Commission investigations against Google.

Contact

David Lawsky, david.lawsky@fipra.com, +322 613 2824, mobile +32 472 91 47 48

ENDS

FairSearch: Android-Entscheidung der Europäischen Kommission fördert Wettbewerb

• Entscheidung lässt Neubelebung des Wettbewerbs um Apps und Betriebssysteme erwarten
• Relevant gegebenenfalls nicht nur für Smartphones, sondern auch für Smart TVs
• Unterstützt mit Wettbewerb und Innovation maßgebliche Elemente der digitalen Wirtschaft

Brüssel, 18. Juli 2018 – FairSearch berichtet über eine Entscheidung der Europäischen Kommission vom Mittwoch, die von Google die Aufgabe seiner wettbewerbswidrigen Kontrolle des Betriebssystems Android verlangt. Dies wird zu einem zunehmenden Wettbewerb bei Mobilbetriebssystemen und Apps und damit bei zentralen Elementen der digitalen Wirtschaft beitragen.

“Der Beschluss ist ein wichtiger Schritt zur Maßregelung von Googles wettbewerbswidrigem Vorgehen in Zusammenhang mit Android”, erklärte FairSearch-Anwalt Thomas Vinje. “Google sollte seine wettbewerbswidrigen Praktiken in Bezug auf Smartphones, aber auch in anderen Bereichen, aufgeben, in denen das Unternehmen einen freien Wettbewerb bisher behindert hat, so insbesondere bei Smart TVs.”

Das Google-Betriebssystem Android ist das global am häufigsten genutzte Betriebssystem. Es ist auf 80 Prozent der weltweit verwendeten Smartphones installiert und kommt zunehmend auch auf anderen Geräten zum Einsatz. FairSearch hatte die Europäische Kommission im März 2013 mit einer Beschwerde auf wettbewerbswidriges Vorgehen von Google aufmerksam gemacht, was ein Prüfverfahren durch die Europäische Kommission nach sich zog.

“Das Verfahren hat sich deshalb über fünf Jahre hingezogen, weil Google eine Vielzahl von Verzögerungstaktiken eingesetzt hat” so Vinje. “FairSearch begrüßt es, dass diese wettbewerbswidrigen Praktiken nunmehr endlich sanktioniert werden”.

Die Entscheidung fordert Google auf, den Vertrieb von Apps einzustellen, die an Android gekoppelt sind.  Sie fordert weiter auf, eine Nutzung von Open-Source-Versionen von Android nicht mehr zu unterbinden und Zahlungen an Mobiltelefonhersteller zu unterlassen, mit denen eine exklusive Nutzung von Google Search auf Mobilgeräten erreicht wurde, die mit Android als Betriebssystem laufen. Herstellern von Mobiltelefonen steht es nunmehr frei, ihren Kunden Geräte mit Betriebssystemen und Apps innovativer Drittanbieter anzubieten.

Hintergrund

Durch das heute sanktionierte Vorgehen war es Google bisher möglich, über die Mehrheit aller Daten zu verfügen, die von Smartphone-Nutzern generiert werden. Googles Gier nach Nutzerdaten ist Auslöser für das wettbewerbswidrige Verhalten, über das die Europäische Kommission zu entscheiden hatte.

Im Grunde genommen ist Google ein Werbeunternehmen, das enorme Gewinne erwirtschaftet, indem es in beispiellosem Umfang Informationen über Smartphone-Nutzer sammelt, diese

Informationen für zielgerichtete Werbung nutzt und damit zu Geld macht. Durch seine Kontrolle über das Betriebssystem der meisten Smartphones, sowie über fast alle wichtigen Apps und sonstigen bedeutsamen Quellen für Informationen über Smartphone-Nutzer hat sich das Unternehmen ein Datenmonopol gesichert.

Dadurch ist es Google gelungen, die Online-Werbung zu dominieren und mögliche Konkurrenten in diesem Bereich auszuschalten. Da Werbung eine der Haupteinnahmequellen der meisten Innovationen im Online-Bereich ist, werden dadurch, dass Google potenziellen Konkurrenten den Zugang zu dieser Ressource abschneidet, letztlich den Kunden Innovationen vorenthalten.

Dies ist der Kern der Entscheidung vom heutigen Tag: Mit dem wettbewerbswidrigen Verhalten, das in der heutigen Entscheidung herausgearbeitet wurde – dem Druck auf Gerätehersteller, Google-Apps gekoppelt an Android zu erwerben, wodurch mögliche Alternativen zu den Google-Produkten Android und Search schon im Keim erstickt wurden – verfolgt Google das Ziel, die Kontrolle über die verschiedenen Datenerfassungsmethoden zu behalten und dadurch ständig neue Daten über die Nutzer von Mobilgeräten und ihre Lebensführung zu sammeln. Obwohl Google sich mittels seiner missbräuchlichen Praktiken eine Monopolstellung bei lizenzierbaren mobilen Betriebssystemen, wichtigen Apps und anderen Quellen von Nutzerdaten gesichert hat, lässt die heutige Entscheidung hoffen, dass der Markt sich künftig für Wettbewerb und Innovation öffnen wird.

Thomas Vinje, Partner bei der internationalen Anwaltskanzlei Clifford Chance, erklärte dazu:

“Die Europäische Kommission hat bei der Beweismittelerhebung und Anwendung der anerkannten wettbewerbsrechtlichen Grundsätze der EU auf das rechtsverletzende Verhalten unglaublich gründliche Arbeit geleistet. Google – selbst Beschwerdeführer in einem Verfahren gegen Microsoft wegen des Vorwurfs einer unerlaubten Kopplung von Browser und Betriebssystem (“Microsoft Browser Tying case”) – hätte sich der Problematik bewusst sein müssen, die damit verbunden ist, Apps gekoppelt an Produkte wie Google Search und Play Store zu vertreiben, auf die Google ein Monopol hat. FairSearch als Beschwerdeführerin ist selbstverständlich ausgesprochen erfreut, dass das Verfahren mit der nachdrücklichen Feststellung eines Rechtsverstoßes endet. Die Entscheidung ist ein wichtiger Schritt zur Maßregelung von Googles wettbewerbswidrigem Vorgehen in Zusammenhang mit Android. Google sollte gezwungen sein, seine wettbewerbswidrigen Praktiken in Bezug auf Smartphones, aber auch in anderen Bereichen aufzugeben, in denen das Unternehmen einen freien Wettbewerb bisher behindert hat, so insbesondere bei Smart TVs. Sollte sich das Vorgehen von Google allerdings nicht ändern, könnten weitere Schritte erforderlich werden, damit das Unternehmen seine dominante Stellung im Mobilbereich nicht weiterhin zum Ausbau seiner Vormachtstellung in der Datenbranche ausnutzt.”

Kontakt:

• David Lawsky, +322 613 2824, Mobil +32 472 91 47 48, press@FairSearch.com
• secretariat@FairSearch.org

Über FairSearch. FairSearch ist ein Branchenverband, der durch Förderung und Verteidigung des Wettbewerbs auf Online-Märkten wirtschaftliches Wachstum, Innovation und Freiheit im Internet zugunsten der Nutzer voranbringen möchte. Zur Erreichung dieser Ziele ist FairSearch aktiv an verschiedenen Prüfverfahren der Europäischen Kommission beteiligt, die Google betreffen. Weitere Informationen finden Sie unter: www.FairSearch.org.

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La decisión de la Comisión Europea sobre Android fomentará la competencia.

• La decisión Google – Android puede facilitar la restauración de la competencia entre aplicaciones y sistemas operativos.
• Estos principios deberán aplicarse a los televisores inteligentes (Smart TVs) y a los smartphones.
• Ayudará a promover la competencia y la innovación vital para la economía digital.

Bruselas, 18 de julio 2018.- FairSearch expresa que la decisión de la Comisión Europea del miércoles ayudará a restaurar la competencia en los sistemas operativos para teléfonos móviles y aplicaciones, vital para la economía digital, obligando a Google a eliminar el abuso resultante de su control sobre Android.

“Este es un paso importante para corregir el comportamiento abusivo de Google respecto a Android” manifestó Thomas Vinje, abogado, a FairSearch.  “Significa que Google debe cesar sus prácticas anticompetitivas sobre los smartphones, pero también en otras áreas – en particular, los televisores inteligentes – donde se produce una exclusión de la competencia por el empleo de las mismas prácticas.

Google Android es el sistema operativo más usado del mundo, funcionando en el 80% de los Smartphones, y extendiéndose a otros dispositivos. FairSearch alertó a la Comisión Europea de los abusos de Google en una denuncia en marzo de 2013, desencadenando la investigación de la Comisión.

“La denuncia ha continuado durante 5 años porque Google empleó todos los trucos posibles para retrasar las acciones” declaró Vinje. “FairSearch está satisfecho de que estas prácticas anticompetitivas hayan sido prohibidas”

La decisión exige a Google que cese de realizar ventas vinculadas de sus aplicaciones y cese también de prohibir el desarrollo de versiones de Android de fuente abierta, así como los pagos a los fabricantes de teléfonos móviles para asegurar la exclusividad de Google Search en dispositivos Android. Los fabricantes de telefonía móvil tendrán libertad de ofrecer a sus usuarios dispositivos diferenciados con sistemas operativos y aplicaciones innovadoras de terceros.

ANTECEDENTES

La conducta condenada hoy ha permitido a Google apropiarse de la mayor parte de los datos generada por los usuarios a través de sus teléfonos. La voracidad de Google por los datos de los usuarios ha impulsado el comportamiento anticompetitivo cuestionado en esta decisión.

Google es principalmente una empresa de publicidad. Genera enormes beneficios recogiendo información sobre los usuarios de los teléfonos y monetizándola dirigiendo publicidad hacia estos usuarios. Asegurando que el sistema operativo, casi todas las aplicaciones principales y otras fuentes importantes de datos están bajo su control, Google se asegura el monopolio de estos datos.

Esta situación ha permitido a Google dominar la publicidad on-line y asegurarse de que otros no pueden competir en este área. Como la publicidad es la mayor fuente de ingresos para la mayor parte de la innovación on-line, los consumidores se ven privados de innovación porque Google acapara los recursos de innovación de sus potenciales competidores.

Esta decisión en realidad se refiere a que la conducta anticompetitiva de Google identificada en la decisión de hoy, el hecho de obligar a instalar conjuntos de aplicaciones de Google en dispositivos originales del fabricante (OEMs) y las restricciones para evitar la aparición de competencia contra Google Android y Google Search, estaba dirigida a controlar las vías de recolección de datos de los usuarios y recoger incluso más información de los usuarios y sus vidas. Mientras las prácticas abusivas de Google han consolidado el monopolio sobre sistemas operativos móviles autorizados, aplicaciones fundamentales y otras fuentes de datos de los usuarios, todavía podemos esperar que la decisión de hoy abra el mercado a la competencia y la innovación.

Vinje, socio de Clifford Chance, afirma:

“La Comisión ha hecho un trabajo increíblemente exhaustivo en la recolección de pruebas y estableciendo la conducta infractora a través de los principios legales de competencia de la Unión Europea. Y especialmente como denunciante en el caso “Microsoft Browser Tying”, Google debería haber sido consciente de que realizar ventas vinculadas de las aplicaciones Google Search y Play Store infringía el derecho de la competencia. FairSearch, como demandante, está obviamente satisfecho de que la Comisión haya concluido que la conducta de Google implicaba una infracción grave de la competencia. Es un paso importante sancionar el comportamiento abusivo de Google en relación con Android. Esto debería significar que Google tiene que cesar sus prácticas anticompetitivas referidas a los smartphones, pero también en otros ámbitos – en particular, los televisores inteligentes – donde se produce una exclusión de la competencia por el empleo de las mismas prácticas. Si Google no aplica cambios en su comportamiento puede implicar la necesidad de reforzar la aplicación de acciones contra la dominancia en telefonía móvil de Google para acabar con su hegemonía en la recogida y tratamiento de datos”.

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FairSearch: Décision de la Commission européenne Android favorisera la concurrence

• La décision Google Android peut aider à restaurer la concurrence pour les applications, les systèmes d’exploitation
• Les principes de décision devraient s’appliquer aux téléphones intelligents et aux téléviseurs intelligents. La décision contribue à promouvoir la concurrence et l’innovation qui sont vitales pour l’économie numérique

Bruxelles, le 18 juillet 2018 – FairSearch a déclaré qu’une décision de la Commission européenne mercredi aidera à restaurer la concurrence pour les systèmes d’exploitation mobiles et les applications, éléments essentiels de l’économie numérique, en exigeant que Google cesse les abus découlant de son contrôle d’Android.

“C’est une étape importante pour discipliner le comportement abusif de Google par rapport à Android“, a déclaré Thomas Vinje, avocat de FairSearch. “Cela signifie que Google devra cesser ses pratiques anticoncurrentielles concernant les téléphones intelligents, mais aussi dans d’autres domaines – les téléviseurs intelligents, en particulier – où il entrave la concurrence en utilisant les mêmes pratiques.”

Google Android est le système d’exploitation le plus largement utilisé au monde, fonctionnant sur 80% des smartphones du monde, et son utilisation s’étend à d’autres appareils. FairSearch a alerté la Commission européenne sur les abus de Google Android dans une plainte déposée en mars 2013, déclenchant l’enquête de la Commission.

“La plainte a traîné pendant cinq ans parce que Google a utilisé tous les moyens possibles pour retarder l’action“, a déclaré Vinje. “FairSearch est satisfait de voir enfin interdire ces pratiques anticoncurrentielles“.

La décision impose à Google de mettre fin aux obligations d’installation groupée de ses applications, à l’interdiction des versions “open source” d’Android, et à ses paiements aux fabricants de téléphones assurant l’exclusivité de la recherche Google sur les appareils Android. Les fabricants de téléphones pourront désormais offrir à leurs utilisateurs des appareils différenciés dotés de systèmes d’exploitation et d’applications provenant de tiers innovants.

CONTEXTE

Le comportement condamné aujourd’hui a permis à Google de s’assurer l’accès à la majorité des données que les utilisateurs génèrent en utilisant leurs téléphones. La soif de s’accaparer les données de l’utilisateur a conduit Google à adopter le comportement anticoncurrentiel mis en cause dans la décision.

Google est en réalité une société de publicité. Il génère d’énormes bénéfices en assemblant des données sur les utilisateurs de téléphones, en les monétisant et en les utilisant pour cibler la publicité sur ces utilisateurs. En veillant à ce que le système d’exploitation, presque toutes les applications clés, et d’autres sources importantes de données sur les utilisateurs de téléphone soient sous son contrôle, c’est effectivement ces données que Google a monopolisé.

Cela a permis à Google de dominer la publicité en ligne et de s’assurer qu’aucune autre entreprise ne puisse rivaliser dans ce domaine. La publicité étant la principale source de revenus pour les avancées de l’économie numérique, les consommateurs sont privés d’innovation car Google prive les concurrents potentiels des ressources pour financer l’innovation.

Les agissements anticoncurrentiels de Google identifiés dans la décision d’aujourd’hui visent à garder le contrôle des moyens de collecte des données sur les utilisateurs et d’amasser toujours plus d’informations sur leur vie.

Vinje, associé à Clifford Chance, a dit:

“La Commission a fait un travail incroyablement minutieux en collectant des preuves et en établissant le comportement illicite sur la base des principes établis du droit de la concurrence de l’UE. En tant que plaignant dans l’affaire Microsoft Browser, Google aurait dû faire preuve de plus de discernement en liant une collection d’applications à son monopole Google Search et Play Store. En tant que plaignant, FairSearch est évidemment ravi de voir aboutir l’affaire avec une forte décision, ce qui constitue une étape importante pour discipliner le comportement abusif de Google vis-à-vis d’Android. Cela signifie que Google devra cesser ses pratiques anticoncurrentielles concernant les téléphones intelligents, mais aussi dans d’autres domaines – les téléviseurs intelligents en particulier – où elle empêche la concurrence en utilisant les mêmes pratiques. Si le comportement de Google ne change pas, de nouvelles mesures d’application de la loi pourraient être nécessaires pour mettre fin à l’utilisation de la dominance mobile de Google afin d’accroître son hégémonie dans le domaine de collecte des données.”

Contacts de presse:

• David Lawsky, +322 613 2824, mobile +32 472 91 47 48, press@fairsearch.com
• secretariat@fairsearch.org

À propos de FairSearch. FairSearch est une association industrielle réunie pour promouvoir la croissance économique, l’innovation et le choix à travers l’écosystème Internet en favorisant et en défendant la concurrence sur les marchés en ligne, au bénéfice des consommateurs. Dans le cadre de sa mission, FairSearch participe activement à diverses enquêtes de la Commission européenne impliquant Google. Pour en savoir plus: www.fairsearch.org.

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[1]      The sincerity of Google’s commitment to open, fair play even at this time is open to question. One month earlier – in November 2009 –  Foundem had filed the first shopping service search complaint to the European Commission, which found this year that Google had given an unfair, illegal advantage to its own shopping service, http://europa.eu/rapid/press-release_IP-17-1784_en.htm

[2]      https://play.google.com/store/apps/details?id=com.google.android.gms&hl=en

[3] The reality is slightly different. For example, apps written for the Apple IOS system sometimes will not work after a phone is updated, until and unless the apps are updated as well.

[4] Preventing “fragmentation” is supposed to reduce the problem of the incompatibility of apps, yet so-called “fragmentation” is common even among closely-controlled proprietaryoperating systems and devices, such as IOS and Windows. Apple is perhaps the most closed, unified system, yet apps which run on one version of Apple IOS may not run on updated versions of the same IOS.

[5]      https://www.digitaltrends.com/android/google-and-alibaba-spar-over-acers-aliyun-phone/

[7]  https://www.weforum.org/agenda/2017/04/the-world-s-most-used-operating-system-you-might-be-surprised/

[8]      http://europa.eu/rapid/press-release_IP-16-1492_en.htm

[9]      EU courts found that the same barrier protected the Microsoft operating system from competition. It is called “the applications barrier to entry”.