In short: Google started making some concrete moves aimed at complying with the antitrust order the European Commission issued this summer, alleging the American technology giant abused the dominant position of its Android operating system in order to promote its mobile apps and services at the expense of rivaling solutions. While the Alphabet-owned firm recently filed a complaint against the decision, it’s now begrudgingly making some changes in order to prevent what the EC deems anti-competitive behavior in the future.
Starting from October 29, original equipment manufacturers interested in forking Android can now do so without ceding their ability to pre-load such gadgets with Google-made apps like Chrome and the Play Store itself. The so-called Android forks won’t be prevented from accessing any of those apps within the European Economic Area, though Google won’t be actively developing its software for such platforms, meaning their performance may still be inconsistent. Google is also separating its Chrome and Search licenses from the main Android one for much the same reasons and will also be licensing application suite packs separately from the operating system. While the latter will remain free, original equipment manufacturers who will want to well devices with Google-developed Android apps in the EU will now have to pay license fees to do so. The change only affects smartphones and tablets, whereas Android TV and other platforms based on the OS will still use the freemium model given how they weren’t the subject of the EC’s antitrust ruling.
Hiroshi Lockheimer, Google Senior Vice President of Platforms & Ecosystems, said the development is not in line with the company’s vision for the future of Android in no uncertain terms. “The pre-installation of Google Search and Chrome together with our other apps helped us fund the development and free distribution of Android,” the industry veteran wrote in a Tuesday blog post. Android itself will remain an open-source project that’s free to use, both in the EU and other parts of the world, Mr. Lockheimer vowed. The newly announced changes won’t affect Android smartphones and tablets released prior to October 29.
Background: The EC’s competition watchdog hit Google with the largest fine ever issued on the Old Continent for antitrust behavior this July, ordering it to pay the equivalent of over $5 billion for abusing the dominance of its OS in order to benefit its app business. The timing of Google’s Tuesday announcement meant to outline the company’s first compliance efforts isn’t accidental either as the EC gave it 90 days to start doing so or face additional fines, with that deadline being set to run out tomorrow, October 18.
The Android antitrust fine came just over a year after Google already set a record for the largest EC-imposed competition fine, having been sanctioned with the equivalent of $2.7 billion for abusing the popularity of its Search engine in order to promote its shopping service. Much like with the Android case, Google appealed the ruling and begrudgingly started implementing compliance changes, arguing the interconnected nature of its services is meant to benefit consumers and not hurt its rivals. A number of high-profile companies such as Yelp previously dismissed that notion as misleading and frivolous, welcoming the EC’s ruling.
This summer, Mr. Lockheimer and many other Google executives argued Android has been envisioned to promote competition from day one, pointing to consistent innovation and aggressive prices of Android devices as proof of that strategy working. However, that point is largely moot because the EC never claimed Google stifled device innovation but competition in the app market. By most estimates, Android accounts for close to 90-percent of the global mobile market share. Google said it never prevented OEMs from pre-installing rivaling apps on devices, maintaining that its license bundles allowed Android to remain free and open-sourced for over a decade. The company also attempted arguing it doesn’t have a mobile monopoly due to iOS but didn’t get far with that point seeing how Apple doesn’t license its OS to other manufacturers and holds a relatively minor share of the global smartphone market with its iPhones, especially outside of the United States.
Impact: While no immediate effects of Google’s changes will be experienced by consumers, the new changes are significant due to their implications for the future of the Android ecosystem as a whole. E.g. there’s now nothing stopping Amazon from pre-loading the Google Play Store and other staple Android apps on its Kindle devices sold in the European Union despite the fact they’re running a heavily modified version of the omnipresent OS. However, only the largest OEMs may be able to take advantage of this fact given how Google-developed Android apps will now actually cost money for anyone looking to pre-load them on their devices in Europe.
At the same time, some of the major manufacturers such as Samsung and Huawei may actually be among the first to ditch the majority of Google apps from their products sold in the EU given how they already have already invested massive resources in developing alternatives for the thereof and they might opt to use every tool at their disposal in order to promote them more aggressively now that they’re able to circumvent a significant part of Google’s mobile portfolio. The effects of the new development should hence be felt as early as this year’s holiday season and some major 2019 releases such as the Galaxy S10 will likely lack a lot of Google apps out of the box, requiring consumers to download them from the Play Store or other sources themselves if they want to use them.
As for Google itself, the company’s appeal is likely to take years to be resolved. E.g. Intel is still fighting its $1.2 billion fine issued by EU regulators over anti-competitive behavior in 2009 and Alphabet’s subsidiary will surely be looking to exhaust all of its legal options before paying anything as well. At the same time, the competition watchdog on the Old Continent is currently also looking into the company’s potential abuse of its advertising network’s dominance, with that probe being set to be concluded in the coming months. Most industry watchers agree the investigation will lead to a third fine, leaving Google with a massive legal headache. Regardless of the current developments, Google’s anti-competitive practices already achieved their desired goal, with the company currently dominating a wide variety of mobile app genres such as Internet search, navigation, and email.
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