Linked by Thom Holwerda on Wed 18th Jul 2018 11:18 UTC
Legal

Update: here's the full press release. Here's the three main violations:

In particular, Google:

  • has required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google's app store (the Play Store);
  • made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices; and
  • has prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google (so-called "Android forks").

Original article continues below.


Google has been hit with a record-breaking €4.3 billion ($5 billion) fine by EU regulators for breaking antitrust laws. The European Commission says Google has abused its Android market dominance by bundling its search engine and Chrome apps into the operating system. Google has also allegedly blocked phone makers from creating devices that run forked versions of Android, and "made payments to certain large manufacturers and mobile network operators" to exclusively bundle the Google Search app on handsets.

I'm okay with bundling applications, but I'm 100% opposed to large corporations like Google blocking competing companies from running forked versions of Android - allowed through Android's licensing - and wealthy corporations basically buying dominance by sending large sums of money to in this case carriers and manufacturers that smaller companies could never afford.

That being said, I do feel like the way we determine what is and is not corporate behaviour damaging to consumers and the market needs some serious overhaul. I've asked this question on OSNews before, but even though Apple doesn't have the market share to qualify as a monopoly, does anyone really want to argue that Apple - which sucks up virtually all of the profits in the handset market, despite its small marketshare - does not have power and influence over the mobile market akin to Google's? Which player has more influence over a market - the player with 10% market share sucking up 90% of the profits, or the player with 90% marketshare sucking up only 10% of the profits?

I'm no economist so I'm not going to claim I know the answer, but it sure does seem like relying solely on market share to evaluate market dominance seems shortsighted, at best.

Order by: Score:
What is an Android fork?
by jonsmirl on Wed 18th Jul 2018 12:38 UTC
jonsmirl
Member since:
2005-07-06

What is an Android fork? The phone vendors are already forking base AOSP, you have to do that to support the different CPUs and peripherals.

The phone vendors can already install their own apps along side the Google ones, just look at a Samsung phone -- two of everything.

So the only definition of an Android fork left is the ability to delete pieces out of Google GMS at the factory. To me that is a direct violation of trademark if the vendors are allowed to replace random pieces of GMS and still call it Android. Because if they start replacing random pieces, all of the apps that run on top of those pieces are going to break.

And it is utterly obvious that this ruling will be used by the phone vendors to suck all of the revenue out of Android by replacing the search engine, ad engine and app store.

These terms are basically a Microsoft Christmas wish list.

What is going to be the outcome of this? The phone vendors will make their changes and everything is going to start breaking. Apple's market share and profits are going to double.

This is similar to the misguided shopping decision, Google was helping to defend the EU against Amazon, now it has been neutered. Amazon has a 50% ecommerce share in the US, how long until that share is the same in the EU? Because it is 100% going to happen.

Edited 2018-07-18 12:39 UTC

Reply Score: 0

RE: What is an Android fork?
by Adurbe on Wed 18th Jul 2018 14:06 UTC in reply to "What is an Android fork?"
Adurbe Member since:
2005-07-06

The problem was that Google wouldn't allow you to run any fork if you wanted to sell any phone with the play store (and associated apps)

So, for example, I wouldn't be Allowed to manufacture

1x Amazon FireOS phone (with amazon store)
1x Yandex Phone (with yandex store and search)
2x Google play Phones

Effectively they made the "open" platform of Android a closed platform eliminating any competition at grass roots and forming a monopoly.

Find me an Android phone in the UK without the Play store and google services as default. The reason you can't is their strategy worked.

Reply Score: 5

RE[2]: What is an Android fork?
by jonsmirl on Wed 18th Jul 2018 14:16 UTC in reply to "RE: What is an Android fork?"
jonsmirl Member since:
2005-07-06

See the comment below, I agree that if Google is using GMS licensing to prevent phone OEMs from making FireOS devices then it is anti-competitive. The press release from the EU is unclear on this point, it says that in 2011 Google was stopping this, but it does not say if Google is still stopping it now.

Reply Score: 1

Google phones?
by jonsmirl on Wed 18th Jul 2018 12:49 UTC
jonsmirl
Member since:
2005-07-06

Another possible outcome here is that EU forces Google into the Apple model -- ie Google simply stops licensing Google GMS and only sells Pixel phones in the EU.

What Vestager's going to say if they pick that option?

Reply Score: 0

RE: Google phones?
by atsureki on Wed 18th Jul 2018 21:40 UTC in reply to "Google phones?"
atsureki Member since:
2006-03-12

Another possible outcome here is that EU forces Google into the Apple model -- ie Google simply stops licensing Google GMS and only sells Pixel phones in the EU.

What Vestager's going to say if they pick that option?


If Google had done that from the word go, one or more of Bada, Tizen, Sailfish, Firefox OS, WebOS, Windows Phone, Blackberry, and Symbian might exist today in some marketable form.

Most of those projects had serious missteps all their own, but the point is that free beer apologists forget what dumping does to the very nature of competition. Now that the only consumer options are Google and Apple, Google gets to set the terms for whether any company outside itself and Apple can participate in the hottest consumer segments of the computing industry. That's the corrupting power of monopoly.

Reply Score: 3

v RE[2]: Google phones?
by imthefrizzlefry on Wed 18th Jul 2018 23:49 UTC in reply to "RE: Google phones?"
Comment by majipoor
by majipoor on Wed 18th Jul 2018 12:50 UTC
majipoor
Member since:
2009-01-22

Google/Alphabet is fined, not Android OEMs: the profits you are talking about are the profit of smartphone manufacturers which is small because Android OEMs have decided to use the price of their smartphones as their main selling point.

Competing on the price in any technology market is a sure way to drive down profits for all actors. Apple does not compete on the price: it is a deliberate (and very risky) choice made by Apple since, well, forever.

The Mac/PC market is not that much different: PC has become mostly a low margins market and Apple also has a huge share of the profit in this market compared to their small market share. Would you argue that Apple has an anti-trust problem in the PC market?

Google makes no profit from Android, but makes huge profit from Ad business which is then used to ensure Google's dominance in the smartphone OS (and other) business. And this is exactly what anti-trust rules are supposed to prevent. It is now too late to do anything against that, but if Android and iOS are the only mobile OS alive today, it is for sure because Google was able to spend a lot of money on building Android and providing it for free to OEMs. In fact, one should be happy Apple did succeed so well, because otherwise, Android would be the only mobile OS available today.

Apple's business model should in fact considered as positive in this respect because they only compete on the merit of their products (not on the price) and only target a fraction of the total market. This business model leave plenty of room for competitors whatever Apple's success is.

Amazon make not much profit from the retail business as well because they choose to use all the money they earn to expand their market share. Would you argue that Amazon is not a potential threat from an anti-trust perspective?

Profit is definitely not a good metric to consider here.

What is important is how much profit you make in absolute value (and Google, Amazon, Facebook, Samsung and Apple make plenty) and how you use that money to eventually prevent or damage competition in a market.

Concerning Apple, they have a VERY different business model which appears to be hugely profitable despite the fact that they only have a 15% share in the smartphone market.

You may not like Apple's mindshare dominance, but from an anti-trust perspective, Apple does not prevent any OEM from competing directly against them (in the premium market). And one of them is very successful until now : Samsung. And Huawei or Xiaomi are quite successful as well. Apple didn't use their supposed market dominance against them simply because Apple has NO market dominance, only a mindshare dominance.

I am sure Apple's business model is not all white, but from an anti-trust perspective, I don't see any reason to compare Apple and Google.

Edited 2018-07-18 12:55 UTC

Reply Score: 5

Price elasticity
by kwan_e on Wed 18th Jul 2018 13:04 UTC
kwan_e
Member since:
2007-02-18

Maybe price elasticity is a better measure?

If price increases (and/or value/quality stagnation/worsening) does not result in a sufficient drop in units sold, that to me says there's something NQR about how much competition there really is.

Reply Score: 3

this bit is not clear
by jonsmirl on Wed 18th Jul 2018 13:09 UTC
jonsmirl
Member since:
2005-07-06

What do they mean with the reference to 2011? Are these restrictions still in place, or were they in place and ended in 2011? If they are still in place I agree they are anti-competitive. Google should not be able to use their GMS license to stop vendors from making FireOS devices.

This whole press release is ambiguous because they are calling both AOSP and 'Google GMS' Android and they are two separate things. That terminology flaw makes references to forking unclear. Is it forking FireOS style, or forking by not installing pieces of GMS?


3) Illegal obstruction of development and distribution of competing Android operating systems

Google has prevented device manufacturers from using any alternative version of Android that was not approved by Google (Android forks). In order to be able to pre-install on their devices Google's proprietary apps, including the Play Store and Google Search, manufacturers had to commit not to develop or sell even a single device running on an Android fork. The Commission found that this conduct was abusive as of 2011, which is the date Google became dominant in the market for app stores for the Android mobile operating system.

This practice reduced the opportunity for devices running on Android forks to be developed and sold. For example, the Commission has found evidence that Google's conduct prevented a number of large manufacturers from developing and selling devices based on Amazon's Android fork called "Fire OS".

Reply Score: 2

v RE: this bit is not clear
by protomank on Wed 18th Jul 2018 13:51 UTC in reply to "this bit is not clear"
RE[2]: this bit is not clear
by kwan_e on Wed 18th Jul 2018 14:36 UTC in reply to "RE: this bit is not clear"
kwan_e Member since:
2007-02-18

Now, not allowing the play store and services to be (easily) installed on forks? It seems to me this is like telling broadcasters: hey, you must allow other devices to get signal from your satellites, even if you can't charge money from those. This is just plain communism.


That's nothing like communism. You're just using that word because you equate it to bad, but the word isn't even in the right category.

Forcing OEMs to set default applications that any user can very easily replace, does not seem to be wrong, per se.


This isn't about right or wrong. This is about the law. In EU law, apparently what Google did is anticompetitive. That view may be different if successfully appealed. Instances of anti-competitive behaviour doesn't feel wrong on the surface, but nevertheless is against the law in any sane economy because little things like that do have an effect.

Reply Score: 4

RE[2]: this bit is not clear
by CaptainN- on Wed 18th Jul 2018 15:58 UTC in reply to "RE: this bit is not clear"
CaptainN- Member since:
2005-07-07

You are technically completely incorrect about IE/WebView and the legal reason for why MS was slapped down about IE.

IE was a problem because MS made contracts with OEMs and leveraged their monopoly ability to set terms to manipulate them into not installing competitor browsers. OEMs could have done it, but then they'd have to pay more for Windows or outright lose their OEM licenses. It literally had nothing to do with the technology.

On Android, Chrome is not actually built into the operating system. A version of Chrome's engine - blink - is built in for use in WebViews (and Android API), but (unless it changed in recent versions, I haven't kept track) is not the same version that Chrome uses. Chrome uses it's own embedded version (and so does Edge, Opera, Samsung Internet, and all the other Blink based browsers on Android - Firefox embeds its own engine).

Reply Score: 0

RE[3]: this bit is not clear
by judgen on Wed 18th Jul 2018 21:37 UTC in reply to "RE[2]: this bit is not clear"
judgen Member since:
2006-07-12

Same reason microsoft also lost to Be.Inc as they made deals to not allow dual boot with BeOS. The lawsuit dragged on until Be.Inc could fight no more, liquidated and solf off the assets of the company (and was no longer a threat) and then microsoft settled.

Reply Score: 2

jonsmirl
Member since:
2005-07-06

Other articles have pointed out that the only phone vendor known to have been paid to install Google search is Apple.

Not sure what the EU is trying to achieve here, Apple is the one selling off their search rights. Google just made the highest bid.

What is their goal? Do they want to keep Google from bidding on the Apple search business?

Reply Score: 0

technical point -- Google search app
by jonsmirl on Wed 18th Jul 2018 14:19 UTC
jonsmirl
Member since:
2005-07-06

What is this Google search app the EU is complaining about? I looked on my phone and can't find anything meeting that description. Are they complaining about "Ok Google" voice processing?

Chrome is obviously there.

Reply Score: 0

RobG Member since:
2012-10-17

That big search bar which insists on dominating your home screen and cannot be removed?

Reply Score: 2

Better definition
by CaptainN- on Wed 18th Jul 2018 15:52 UTC
CaptainN-
Member since:
2005-07-07

Monopoly isn't about market share (at least not entirely). It's about having enough influence in a market to set and control prices.

Apple may not have a large market share in end consumer sales, but they are absolutely able to set prices from their manufacturing partners, and are able to regularly garner preferential treatment. This makes them a monopoly (usually called a vertical monopoly, another misunderstood term).

Even a company with only 60% or 70% of market share can still have a monopoly if you can control prices. The ability to dictate prices is the key concern with monopoly, not market share. We need to either have a better definition for this word, or just start using a new word.

Reply Score: 5

v RE: Better definition
by kristoph on Wed 18th Jul 2018 19:06 UTC in reply to "Better definition"
RE: Better definition
by majipoor on Wed 18th Jul 2018 20:16 UTC in reply to "Better definition"
majipoor Member since:
2009-01-22

Apple may not have a large market share in end consumer sales, but they are absolutely able to set prices from their manufacturing partners, and are able to regularly garner preferential treatment.


Hum. No.

Apple is not able to set the price by any coercive method as Google is able to force OEM to use their services by threatening them to revoke their Android license.

It appears that Apple is a HUGE potential customer and manufacturing companies just want to become a partner because it is a unique business opportunity for them.

The problem for them is that Apple is a master at negotiating the best possible prices by making their partners to compete against each other whenever possible. But this is just very efficient (and arguably agressive) business practice from Apple. You may not like it and being an Apple partner is for sure a quite difficult and risky bet (but also potentially very lucrative), but it has nothing to do with anti-trust law.

But manufacturing partners are not obliged to accept Apple conditions: it would not threaten their business but would only be a missed opportunity for them to grow it: 85% of the smartphone market is still wide open for them outside Apple to find other OEM willing to buy their products.

TSMC is a good example: it was very hard for them to get Apple's business, but they succeeded and became one of the biggest and most advanced semi-conductor company thanks to Apple's Ax SoC business. For sure Apple did negotiate with TSMC concerning the price, but do you really think that Apple can just set the price and TSMC has no leverage?

And partners such as Samsung are even more powerful than Apple for key components such as the iPhone X OLED display or flash memory: Samsung is the one using its dominance here to set their price on Apple.

Apple is only one of the biggest smartphone company and everybody want a piece of the cake.

Anti-trust law is about companies having a dominant position in a market a using it to abuse this position to harm competition it this or another market.

Reply Score: 1

RE[2]: Better definition
by shotsman on Thu 19th Jul 2018 06:17 UTC in reply to "RE: Better definition"
shotsman Member since:
2005-07-22

One correction

Apple is not the 'biggest smartphone' company. AFAIK, Samsung or possibly one of the chinese makes is.
What is correct is that. Biggest <> most profitable.

Apple is the most profitable smartphone company.

Apple can't dictate to Huawei what prices their phones are sold at. What happens is that the likes of Huawei look that the respective offering from Apple and prices their phone accordingly which is usually quite a bit lower than the equivalent Apple offering.

Reply Score: 2

Nice pivot Thom
by Tony Swash on Wed 18th Jul 2018 16:29 UTC
Tony Swash
Member since:
2009-08-22

Google are fined for anticompetitive behaviour and longest section of your response is about Apple. Well played.

BTW if you want to know what this is all about have a look at these tweets from DuckDuckGo responding to and welcoming the EU's actions

https://twitter.com/DuckDuckGo/status/1019562507294461953

Reply Score: 2

RE: Nice pivot Thom
by judgen on Wed 18th Jul 2018 21:34 UTC in reply to "Nice pivot Thom"
judgen Member since:
2006-07-12

I do agree about the not allowing defaults being silly, but the google search widget is not locked, and most if not all people i have ever met removes it from the home screen to fit more app icons instead as even the lowliest of the tech incapable seem to know that just starting the browser and typing in the adress field a query will research in results from a search engine as expected.

Reply Score: 1

v Vestager
by judgen on Wed 18th Jul 2018 21:30 UTC
zima Member since:
2005-07-06

I can't help but feel like the EU council is creating a new law and charging Google of breaking it at the same time. Did anyone at the EU propose to make these actions illegal before fining Google a ludicrous amount of money?
[...] As far as I know, before this ruling was made, there was no specific law that was broken; then poof, Google owes BILLIONS because the council made a new law with no warning.

That's kinda largely how your common law system works, with precedents; not European one. Anyway, antitrust laws have been on the books for quite a while in many places, EU just has the courage to enforce them.
I just feel like the EU council is greedy, and is extorting/bullying US companies because member nations can't afford all their social welfare programs or something.

Ehh, 4.3 billion is a drop in the bucket of EU budget; not to mention combined budgets of EU memberstates. Also, EU fines mostly European companies, you just don't hear about it in US-focused blogosphere...

Reply Score: 3