Q&A: Why has the EU got Google’s Android in its sights?

Google is accused of misusing the dominance of its mobile operating system

European competition commissioner Margrethe Vestager addresses a news conference in Brussels. She is concerned Google may be stifling smaller app makers and service providers. Photograph: Francois Lenoir/Reuters
European competition commissioner Margrethe Vestager addresses a news conference in Brussels. She is concerned Google may be stifling smaller app makers and service providers. Photograph: Francois Lenoir/Reuters

The EU has opened a new front in its showdown with Google by announcing formal charges in relation to the company's mobile operating system, Android.

The case represents a fresh chapter in Brussels’ efforts to combat the alleged abuses of US technology companies, and has already drawn comparisons with its clash with Microsoft a decade ago.

Has the EU not already charged Google with anti-competitive behaviour?

Yes, this is a second charge sheet, known as a statement of objections. The first accused Google of abusing its dominance of online search to promote its own shopping services unfairly. Google denies the charge and the case is ongoing.

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How dominant is Android as the operating system on smartphones?

Very. More than 80 per cent of smartphones globally use Android’s open-source system, which can be used free of charge by anyone. By contrast Apple’s own iOS operating system, used in the iPhone and iPad, represents only about 13 per cent of the market, according to data from Gartner.

Is being so dominant illegal?

No, but EU rules mean that Google faces special requirements not to crush market entrants because of its overwhelming market share.

Why does the commission think Google could be harming other companies?

Margrethe Vestager, European commissioner for competition, says she is concerned that Google is forcing phonemakers and operators to enter contracts that preload Google apps onto smartphones. This means that Google could be stifling smaller, innovative app makers and service providers, who will find it hard to reach the market unless they are promoted on Android.

Was this problem of pre-installed software not at the heart of EU’s epic Microsoft case?

There are some similarities. Microsoft was bruised by its years of antitrust conflict in Brussels and was found to have abused its dominance of PC operating systems to force its media player on consumers. The case closed in 2007, with more than €2 billion in combined fines.

But the digital world has changed. Microsoft was making money by selling the software itself. Android is free. Google is monetising the platform in a far more complex way, by harvesting data on users to target them more effectively with advertising, and selling its services to them via various apps.

Is Google facing any other charges?

The investigation has focused on two other areas. Brussels has said it is examining whether Google prevents smartphone makers from developing their own modified versions of Android, called “Android forks”. Vestager will also probably have to broach the difficult subject of “tying” – weighing up whether Google illegally hindered rival apps by establishing digital connections that automatically push Android users towards Google’s own services.

What does Google say?

The company denies all wrongdoing. It says its app networks have given consumers more choice than ever before. It rejects any suggestion by the commission that it is trapping customers into using its apps. It says that its competitors’ apps – from the likes of Facebook, Amazon, Microsoft and Expedia – are easily available with Android. Samsung’s mobile phones are pre-installed with apps from Google’s rivals. Companies including Nokia and Amazon have also used versions of Android without pre-installing Google apps.

Why is Apple’s closed iOS operating system not under the spotlight too?

That returns us to the issue of dominance. Google is feeling the heat because its market share is so much bigger than Apple’s, and it is therefore under greater pressure to change its behaviour.

What is the potential remedy if the commission does conclude there has been wrongdoing?

The commission is keeping its cards close to its chest.

Some lawyers close to the case think the most likely course is that Brussels will seek to revise the contracts between Google and phone companies, looking to restrict Google’s ability to determine the extent to which its apps are used on Android.

Will Google have to pay a fine?

If the commission finds wrongdoing, it can technically impose a fine of up to 10 per cent of the previous financial year’s turnover, which was $74.5 billion in Google’s case. Most people involved doubt that any ultimate fine could be anywhere near the maximum. – Copyright The Financial Times Limited 2016