Google accused of abusing Android smartphone monopoly in new battle with Brussels
Google has been formally charged with monopoly abuse over an alleged effort to crush rivals to its mobile search service and Android smartphone operating system, in a major escalation of its battle with Brussels.
Margrethe Vestager, the European Commissioner for competition, accused Google of pursing “an overall strategy on mobile devices to protect and expand its dominant position in internet search”.
She issued a Statement of Objections against the web giant, a charge sheet that marks the first formal stage towards potential fines of up to a tenth of its $75bn annual turnover.
The Android charges are the second competition case Ms Vestager has brought against Google since her appointment 18 months ago, after she took a harder stance in a long-running investigation of its alleged abuses in the market for specialised web search.
She said: “We have no grudge against any company. We have an obligation to look at whether behaviour is anti-competitive or an abuse of dominance.”
Competition officials in Brussels launched an investigation over concerns that manufacturers of Android smartphones were not free to install operating systems from Google’s rivals, or to do deals with competing search engines to help them get a foothold in the mobile market.
Ms Vestager said that Google controls more than 90pc of the market for mobile operating system licensing in Europe.
According to the Commission’s statement of objections, Google abuses this dominance to place “unjustified restrictions” on smartphone manufacturers and mobile operators.
It seeks to ensure that its dominance of mobile search is maintained, imposing conditions on licences for the “must have” Google Play app store, Ms Vestager said. In order to install the app store, manufacturers must agree to also install the Google search app and Google Chrome web browser, according to the charges.
“In short, those tablet and smartphone manufacturers are not free to choose which search engines and which browsers to install,” Ms Vestager said.
“This is not good. It is one of my priorities for consumers to enjoy a wide range of innovative mobile products, services and platforms.”
The European Commission’s decision to press ahead with another competition case against Google is likely to anger the Obama administration, which has previously intervened over what it sees as a campaign against US technology companies driven by economic protectionism.
Last year Mr Obama complained that “oftentimes what is portrayed as high-minded positions on issues sometimes is just designed to carve out some of their commercial interests”.
American suspicions of a political agenda have been intensified by a string of policies and statements from European politicians designed to encourage home-grown internet players to compete with Google, Facebook and other dominant US tech giants. For instance, tighter European data protection rules have been interpreted in Washington as an attack on Silicon Valley.
The high-profile technology venture capitalist Peter Thiel, an early investor in PayPal and Facebook, has claimed the tension is the result of jealousy and Europe’s economic decline.
Allegations of monopoly abuse in relation to Android strike at a growing and increasingly important part of Google’s business. It does not charge smartphone manufacturers for the software, but funds its development to help ensure its highly profitable main search business is widely used on mobile devices.
The strategy has proved profitable, according to the database giant Oracle, which has sued Google over the rights to the technology behind Android. In a court hearing earlier this year, the company claimed that the mobile operating system had indirectly delivered $31bn in sales and $22bn in profit since its launch in 2008.
Google is also accused of suppressing competition by offering financial incentives to ensure that manufacturers do not install a rival to Android, such as one of the many adaptations of the software known as “forks”.
Although the iPhone accounts for roughly a third of the smartphone market, Google is considered dominant because Apple does not compete to license its mobile operating system, iOS.
Ms Vestager emphasised that the charges over Android were separate to the row over specialised web search. In that case the Commission is considering Google’s detailed response after three failed attempts to reach a settlement.
In the new case, Google has 12 weeks to mount a fightback or offer concessions once it has received competition watchdogs’ detailed allegations.
Ms Vestager said: “The remedy in the case is quite simple. It is to stop these practices which we find to be damaging to innovation and competition.”
The charges are a boost to Google’s enemies in Europe, which include the Oracle and a string of European internet and mobile start-ups that claim its monopoly abuse has stymied their growth.
Thomas Vinje, spokesman for FairSearch, a lobby group funded by Google’s critics, said: “Virtually every phone maker using Google Android in the European Union has bowed to Google’s demands, suppressing competition by other app makers and preventing free choice for consumers.”
Kent Walker, Google’s general counsel, said: “Android has helped foster a remarkable and, importantly, sustainable ecosystem, based on open-source software and open innovation. We look forward to working with the European Commission.”
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