EU Claims Google's Android Practices Violate Antitrust Law

AP Photo/Marcio Jose Sanchez, File
Google campus

Europe says Google has favored its Android system over competitors in Europe.

The European Commission on Wednesday formally accused Google of antitrust violations, saying in a so-called statement of objections that the online giant has been abusing the dominance of its Android mobile operating system.

Specifically, the Commission claimed Google and its parent company Alphabet Inc., were stifling competition by their business practices, including requiring phone manufacturers to pre-install Google Search and Google's Chrome browser on their devices and requiring them to set Google Search as their default search service as a condition to license certain Google proprietary apps and preventing manufacturers from selling smart mobile devices running on competing operating systems based on the Android open source code. Because Google has a near-monopoly on the markets for general internet search services, licensable smart mobile operating systems and app stores for the Android mobile operating system, with a more than 90 percent share of each in Europe, the Commission says Google's activities violate European anti-trust law.

"A competitive mobile internet sector is increasingly important for consumers and businesses in Europe," said EU Commissioner Margrethe Vestager, who is in charge of competition policy, in a statement. "Based on our investigation thus far, we believe that Google's behavior denies consumers a wider choice of mobile apps and services and stands in the way of innovation by other players, in breach of EU antitrust rules. These rules apply to all companies active in Europe. Google now has the opportunity to reply to the Commission's concerns."

Android has become the dominant mobile software in recent years. Android accounts for 71 percent of operating systems used on mobile phones in Western Europe, above the 59 percent figure for the U.S., according to data from research firm IDC.

“Android has helped foster a remarkable — and, importantly, sustainable — ecosystem, based on open-source software and open innovation," said Kent Walker, senior vp and general counsel at Google. "We look forward to working with the European Commission to demonstrate that Android is good for competition and good for consumers."

In a blog post, he added that the company takes the Commission's objections “seriously, but we also believe that our business model keeps manufacturers’ costs low and their flexibility high, while giving consumers unprecedented control of their mobile devices.” Walker said Google was looking forward to working with the European Commission “to demonstrate the careful way we’ve designed the Android model in a way that’s good for competition and for consumers."

The statement of objections is the latest step in a formal investigation by the EU into Google's alleged antitrust violations. Wednesday's announcement does not mean the Commission will necessarily proceed with formal charges against Google or its corporate parent Alphabet. The Commission usually gives companies accused of antitrust violations 10 weeks or more to respond to charges and gives them a chance to request a hearing. Google could also appeal a final decision, meaning the overall process could take years, said one analyst.

The EU Commission is also carrying out separate investigations into Google practices in other areas, including Google allegedly giving favorable treatment to its own specialized services in Google Search, and concerns regarding the use of rivals' web content.

A year ago, the Commission, the EU's body dealing with antitrust issues, had said that Google has been using its position in internet search to favor its own services and unveiled the probe into Android. It is concerned that the online giant has been using its market position to give unfair prominence to its search, maps and other apps in software licensing deals with mobile phone companies that use the Android system. The Commission highlighted that those deals require companies to offer Google apps in addition to others they choose to provide.

The Wednesday news comes after nearly six years of investigations and various antitrust complaints in Europe against the company. If the EU ends up finding Google guilty of antitrust violations, it could force it to change the way it does business and fine it. Fines can go to up to 10 percent of a company's total revenue. Based on 2015 revenue, that could bring a Google fine to $7.4 billion.

The Google investigations have been the largest antitrust case in Europe since regulators levied nearly $2 billion in fines against Microsoft over a decade ago.

EU regulators have been targeting U.S. technology giants and what they perceive as their dominance that affects access to digital services in the 28 EU member countries. Among others, Facebook has faced privacy complaints, while Apple and Amazon have been criticized for favorable tax deals in Europe.