By: Nicole Desbois,
When everyone first unwraps their new smart phones and turns them on, they expect to see certain pre-installed apps. With the iPhone there is iMaps, iTunes, News, iBooks and plenty more. The same goes for Android software smart phones. Google maps, Google search, and nine other Google apps are pre-downloaded. Unfortunately, for Google the European Union is particularly troubled by the pre-installment of their products across various smart phone manufactures such as HTC and Samsung.
Google is currently being charge by the European Union with “unfairly using Android to promote its own services – like mobile search over those of its rivals”[1]
The issue here is Google has signed contracts with popular phone manufactures like HTC and Samsung which provide financial incentives to exclusively pre-install Google applications, such as Google Maps, Google Search, and “links to the company’s app store, from which Google takes a cut of each application sold.” In these licensing agreements with Android, Google requires smartphone makers to load 11 core Google apps onto the phone before a customer buys it. The apps need to be at least one swipe away from the home screen, and customers cannot delete those apps.”[2]
On top of this stringent licensing agreement, Google is also making money off the advertising revenue from the use of its search engine. Although manufactures are free to include their own applications as part of the mobile software, the chances of consumers choosing relatively unknown brands in favor of Google is slim.[3]
Not only does Google have the financial incentives to strong arm smart phone manufacturers into these deals, but device makers are continually struggling against one competitor in particular, Apple. Which raises questions over Apple’s own software system. When a consumer purchases an iPhone certain apps are packaged with the phone. Additionally, consumers again are not given the option to delete those pre-downloaded applications. The main different in Apple’s case is their software works exclusively with the iPhone as opposed to be utilized across brands like Android with manufactures like HTC and Samsung.
In response to these accusations, “Google says its relationships with cellphone manufacturers are voluntary and that rival mobile services, including those from the likes of Amazon and Facebook, are readily available on its Android software, which does not restrict people from downloading competitors’ applications.”[4]
However, no one is going to delete Google apps, like Maps, in exchange for a download of an unknown operating company. Additionally, consumers with pre-downloaded apps are more likely to be subconsciously persuaded that perhaps googles apps run better with a google software system. Advertising for alternative software systems is unlikely fruitful when the search engine pulling up these advertisers is the competition itself. Again, even if competitors are allowed to include their own applications, users are still more likely to gravitate towards the familiar.
Margrethe Vestager, Europe’s antitrust chief, has voiced her concern “that, by requiring phone makers and operators to preload a set of Google apps, rather than letting them decide for themselves which apps to load, Google might have cut off one of the main ways that new apps can reach customers.”[5]
Right now Google’s version of Android powers more than “98 percent of the Android-based smartphones in Europe and the United States.” [6] Additionally, Android based smartphones accounted for 76.5% of the smartphones sold from March to May of this year in the European Union.[7]
Google continually makes the argument that the deals they make with phone manufactures, and consumer choice over app preference, is all voluntarily. However, is any of it actually voluntary or is it necessary? There are no large scale competitors, and further funding to build a platform to compete with Google seems fruitless. Who would invest in a product that does the same thing as Google, when Google is already trusted, and has a software system that currently powers over 75% of the smartphones sold in Europe? The funding isn’t there, nor is the incentive.
The EU executive body has given the Silicon Valley-based company an October 31st deadline to provide evidence whether it may or may not have been abusing its power to block out competitors.[8] Google could face a fine of around 10% of the company’s annual revenue worldwide, which is about 7 billion dollars.[9]
[1] Mark Scott, E.U. Charges Dispute Google’s Claims That Android Is Open to All, New York Times (Apr. 20, 2016), http://www.nytimes.com/2016/04/21/technology/google-europe-antitrust.html.
[2] David Goldman, Google Charged by EU in Android Monopoly Lawsuit, C.N.N. (Apr. 20, 2016), http://money.cnn.com/2016/04/20/technology/google-android-lawsuit-europe/.
[3] Mark Scott, E.U. Charges Dispute Google’s Claims That Android Is Open to All, New York Times (Apr. 20, 2016), http://www.nytimes.com/2016/04/21/technology/google-europe-antitrust.html.
[4] Mark Scott, E.U. Charges Dispute Google’s Claims That Android Is Open to All, New York Times (Apr. 20, 2016), http://www.nytimes.com/2016/04/21/technology/google-europe-antitrust.html.
[5] Mark Scott, Google’s Antitrust Woes in Europe Are Likely to Grow, New York Times (Apr. 19, 2016), http://www.nytimes.com/2016/04/20/technology/google-android-eu-antitrust.html?_r=0.
[6] Mark Scott, E.U. Charges Dispute Google’s Claims That Android Is Open to All, New York Times (Apr. 20, 2016), http://www.nytimes.com/2016/04/21/technology/google-europe-antitrust.html.
[7] Android Share Tops 75% in Europe’s Largest Markets, Market Wired (Jul. 13, 2016), http://www.marketwired.com/press-release/android-share-tops-75-in-europes-largest-markets-2142004.htm.
[8] C. See, Google-Parent, Alphabet Inc. Forced to Respond to Changes Suggested by the EU or Get Fined for Violating Antitrust Rules, News Everyday (Oct. 16, 2016), http://www.newseveryday.com/articles/48623/20161006/google-parent-alphabet-inc-forced-to-respond-to-changes-suggested-by-the-eu-or-get-fined-for-violating-antitrust-rules.htm.
[9] Marty Baes, How the EU Plans to End Google’s Dominance in Europe, Tech Times (Oct. 5, 2016), http://www.techtimes.com/articles/180668/20161005/google-anti-trust-cases-european-union-punishing-google-google-anti-trust-issues.htm.
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