Google Sees EU Antitrust Threat to Giveaway Android Strategy

  • Open-source platforms could be threatened by EU antitrust case
  • Google files formal response to EU objections sent in April

Google’s strategy of giving away mobile-phone software will be at risk if European Union antitrust regulators order it to change distribution pacts with phone makers and telecom operators, one of the search-engine giant’s top lawyers said in a blog post on Thursday.

Google is telling the EU that the Android operating system "hasn’t hurt competition" when it’s installed on phones and tablets for free and under strict conditions, Google General Counsel Kent Walker said in the blog. An EU assault on that model would "send an unintended signal favoring closed over open platforms" and undermine how the company tries to protect and promote its software.

Google filed its formal response Thursday to answer regulators’ charges that it wields its power as the world’s leading phone software supplier to impose its search and Web programs on billions of mobile users. The EU in April sent Google a formal antitrust complaint, accusing the company of striking restrictive contracts requiring phone makers to install Google apps and of paying telecom operators to put Google search on devices.

Radical Changes

The Android probe is one of three that Alphabet Inc.’s Google is fighting to avoid potentially huge fines and radical changes to the way it does business. The EU must now weigh Google’s responses to its allegations against Android and its comparison shopping and online advertising services before it weighs decisions that can fine a company as much 10 percent of yearly revenue.

"Distributing products like Google Search together with Google Play permit us to offer our entire suite for free -- as opposed to, for example, charging upfront licensing fees," Walker said. "This free distribution is an efficient solution for everyone -- it lowers prices for phone makers and consumers, while still letting us sustain our substantial investment."

Regulators underestimate the importance of Google’s efforts to create a common, consistent version of the software so that phones and apps are compatible, Walker said, rebutting a claim that the company unfairly prevents the creation of other versions of the software. Such fragmentation is a concern for developers who want programs to run seamlessly on all Android devices, he says.

Pre-loaded Aps

Google loads 11 apps, including its mapping and search services, on phones along with Android. Walker said these usually account for less than a third of pre-loaded apps and can be swiped away at any time. Google also contests the EU’s view that Android doesn’t compete directly with Apple Inc.’s software loaded only on Apple products.

The European Commission received Google’s response and would carefully consider it before taking any decision on how to proceed with the investigation, said spokesman Ricardo Cardoso in an e-mail.

Fairsearch, a group including TripAdvisor Inc. and Nokia Oyj, called on the EU to pursue the case to the end "and require Google to change its behavior so consumers can benefit from the resulting innovation emerging from a competitive marketplace for search, browsers, and everything else on a smart phone." It asked the EU in 2013 to investigate Android.

Russia’s anti-monopoly office this month ordered Google to pay a 1 million-ruble ($15,400) fine for failing to fully comply with an earlier order to stop pre-installing its apps on Android mobile devices. The company was fined 438 million rubles in August for violating antitrust rules, following a complaint by Russian search engine Yandex NV.

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