European Commission Competition Head Seeks Changes To Google’s Mobile Services, FT Reports

Yesterday, the Financial Times reported that Joaquín Almunia, the EU’s competition commissioner, is calling for Google to make many changes to its mobile services as part of his inquiry into Google practices. Currently, the Financial Times said, negotiations between Google and Almunia are tense and on a “knife-edge.”

Interestingly, Almunia’s inclusion of mobile considerations adds to the four areas of concern he identified earlier, all of which focus on Google’s traditional browser-based services. Those areas are how Google promotes its own services over others in search results; “scrapes” content from other websites; engages in anti-competitive advertising agreements; and restricts advertisers from moving campaigns to rival sites.

The Financial Times suggested the fate of the Google-EU talks now rest on the proposed changes to the mobile services, and if Google balks at those suggestions Almunia could proceed with a formal statement of objection.

While the FT offered no details on Almunia’s mobile proposal, here are some facts on Google’s dominant mobile position, something that’s often overlooked.

• Google controls 95% of all Internet searches in Europe.
• Google’s Android operating system has more than 50% of the market in Great Britain, Germany, France and Spain, according to a report released by Kantar World Panel.
• Google makes it a requirement to use its payment systems to access the Android market.
• Google’s recent acquisition of Motorola Mobility, which holds more than 17,000 patents in the mobile phone space, helped the search giant grow its second-quarter revenue 35% to $12.2 billion. When the EU cleared the $12.5 billion deal in February Almunia said regulators would “keep a close eye on the behavior of all market players in the sector, particularly the increasingly strategic use of patents.”
• Skyhook Wireless claimed Google has leveraged the Android platform to push Skyhook out of the location-based service game.
• Dan Morrill, a manager in the Android group, said in an e-mail that mobile phone makers were catching on that “we are using compatibility as a club to make them do things we want.”
• Executives for wireless carriers or smartphone makers who want access to the latest Android version must adhere to Google growing demands, according to Bloomberg Businessweek. This runs contrary to Google’s launch of Android as an “open source” platform.
• Technology policy expert Susan Crawford asked in a July 8 Bloomberg column if competition and antitrust authorities should be looking at Google’s mobile dominance along with its traditional search services in antitrust reviews.
• The U.S. Federal Trade Commission subpoenaed Apple as part of its antitrust probe of Google. The FTC sought details on how the rival phone maker incorporates the search engine on the iPhone and iPad. Google Chairman Eric Schmidt sat on Apple’s board until 2009.
• The FTC cleared Google’s acquisition of AdMob years ago, a mobile play, ostensibly because Apple introduced iAd as a competitor. However, Google now controls 89% of this market, which is predicted to soar in the coming years.
• In 2010, and again more recently, Google blocked Microsoft’s new Windows Phones from operating properly with YouTube. Google’s own Android phones allow users to easily find favorites and see ratings in the rich user interfaces offered by those phones. Google has done the same thing for the iPhones offered by Apple, which doesn’t offer a competing search service.

So, it seems, Commissioner Almunia has many reasons to seek concessions from Google. We hope they are rapid, meaningful changes in Google’s practices so these markets become truly competitive. We also would like to see legally enforceable solutions with strong monitoring provisions, and quick resolution as opposed to a long drawn out process.