Why the FTC is likely to hit a dead end probing Google's Android

Why the FTC is likely to hit a dead end probing Google's Android

Summary: The FTC is looking into Google's business practices around Android, but the probe may not yield much given the smartphone industry is so competitive.

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The Federal Trade Commission is reportedly eyeing Android in its investigation of Google business practices. On the surface, Android seems like a natural target for regulators, but the details are a bit trickier.

According to the Wall Street Journal, FTC lawyers are looking into whether Google prevents smartphone manufacturers from using competitors’ services. The FTC is also looking at whether Google favors its own properties in search results.

The Android argument is probably the most interesting. Here are the moving parts that would attract regulators like flies.

  • Android market share has surged to 39 percent of the smartphone operating system market from zilch. Apple is second with 28 percent of the market, according to Nielsen.
  • Google was partially able to get this share by giving away Android because it could make money off of search.
  • Mobile ads are the next frontier Google can leverage.
  • And Google can bundle its services and tightly integrate them into the operating system.

On the surface, Google's Android bundling rhymes with Microsoft's Windows-Internet Explorer bundle that killed Netscape.

Android's success could be an "ah-ha!" moment for regulators, but the reality is vastly different. Here's why:

  1. When Google launched Android it filled a competitive vacuum in the smartphone industry and served as a counterweight to Apple's iOS.
  2. The smartphone industry is highly competitive even among vendors on team Android. HTC, Motorola and Samsung are killing each other.
  3. A user isn't forced into any Google service on Android. For instance, I use Firefox on my Android device over the included browser. Bing is there too. And so is Amazon's app market. Verizon has its navigation app and so does Google.
  4. You could argue that Android wouldn't have been a runaway train if Microsoft would have had its Windows Phone 7 act together sooner. Android also would have been thwarted if RIM would have moved at a faster pace.

Add it up and the FTC doesn't have a ton to work with on Android. The legal types could argue that Google favors its own services, but network carriers can tweak Android as they see fit. Verizon has no problem plopping Microsoft's Bing on an Android device. AT&T also has its tweaks.

In the end, FTC can poke around Android to see if there's any wrongdoing, but it will be a tough case to make from a purely antitrust perspective.

Update: There have been a few folks that disagree with the argument above---actually more than a few. The best argument against my points come from Scott Cleland at the Precursor Group. His argument is that the FTC isn't just about antitrust. The FTC can investigate and put restrictions on companies based on deceptive practices. Cleland said that if the Department of Justice were investigating Google then my argument would hold up better.

Cleland on Forbes last month argued that Google has been deceptive about its business practices. His report on the subject goes into more detail, but the crux of the argument is that Google doesn't disclose its conflicts of interest and then uses search to enter new markets. Whether you buy Cleland's argument is your call, but his report is worth a read.

The money slide:

Related:

FTC adds Android to Google antitrust probe

Topics: Hardware, Android, Google, Mobile OS, Mobility, Security, Smartphones

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  • RE: Why the FTC is likely to hit a dead end probing Google's Android

    Axes of Evil will fail, and freedom will eventually come ...
    AdnanPirota
    • RE: Why the FTC is likely to hit a dead end probing Google's Android

      @AdnanPirota

      Thanks George.
      zdnet@...
    • RE: Why the FTC is likely to hit a dead end probing Google's Android

      @AdnanPirota

      So you mean Apple finally be brought down for their anti-competitive practices?! =P
      NetAdmin1178
    • RE: Why the FTC is likely to hit a dead end probing Google's Android

      @AdnanPirota

      Oh God no...not the Axes of Evil! http://goo.gl/JKAzJ
      gork platter
      • RE: Why the FTC is likely to hit a dead end probing Google's Android

        @gork platter

        rofl!
        inkwell
    • RE: Why the FTC is likely to hit a dead end probing Google's Android

      @AdnanPirota
      Great, it's about time Apple is taken down:)
      mschauber
    • RE: Why the FTC is likely to hit a dead end probing Google's Android

      @AdnanPirota ... ooooooh. Look out for those axes - they can be sharp ;)

      I'd like to consider the author's reasoning for a moment, revised historically:
      <ul>
      <li>When Microsoft launched IE it filled a competitive vacuum in the browser industry and served as a counterweight to Netscape Navigator.
      </li><li>The browser industry is highly competitive even among vendors on team IE. Dell, HP and Gateway 2000 are killing each other.
      </li><li>A user isn?t forced into any Microsoft's service on Windows. For instance, I use Firefox on my Windows device over the included browser. Bing is there too. And so is Amazon?s app market. Verizon has its navigation app and so does Google.
      </li><li>You could argue that Navigator wouldn?t have been a runaway train if Microsoft would have had its IE act together sooner. Navigator also would have been thwarted if Opera would have moved at a faster pace.
      </li></ul>

      Pretty much the same logic was used when discussing IE vs. Navigator and we all know how that logic was dismissed.

      It'll be interesting to see if the FTC has the balls to measure Google by the same yardstick that the US Gov't and EU used to measure Microsoft.
      bitcrazed
  • RE: Why the FTC is likely to hit a dead end probing Google's Android

    Until they come to the question:-

    Did Google unfairly use it's influence with Android to prevent a competitor's services (Skyhook) from being used by OEM's?

    That manoeuvre was as evil as anything Microsoft has done.
    bannedagain
    • RE: Why the FTC is likely to hit a dead end probing Google's Android

      @bannedagain <br>Better question. Did MS unfairly use it's influence with money and a former employee to prevent a competitor's OS (Android) from being used by Nokia?<br><br>Also, did MS unfairly use it's influence with WP7 to prevent a competitor's service (google search) from being used by OEMs?<br><br>Actually this one is not worth asking because we already know the answer. Not only are OEMs forced to use Bing as default, they can't allow consumers to change it either.
      anono
      • RE: Why the FTC is likely to hit a dead end probing Google's Android

        @anono

        Nah. Elop's from Microsoft. The better question is, was there a secret kickback between former employee and employer?
        gork platter
      • RE: Why the FTC is likely to hit a dead end probing Google's Android

        @anono
        Hmm, that's funny... I can use many other search methods on my WP7 aside of Bing... Maybe you should try it before you think you're the professor.

        Money is one thing that both companies were bringing to the table... Just because it came from MS doesn't mean anything. Elop may have had some influence but then again the company as a whole could choose as well. Symbian has the highest amount of Mobile Malware and Google is right on their heels. So far I haven't heard about any WP7 malware... Then again MS should know security better then the competition since it has had to deal with such on this desktop OS.

        If MS is willing to flip the bill for their products to be used Google could do the same but they don't... Why? Because they want the free handout... about 97% of their profits made are by advertising and collecting personal information from sheep such as yourself. Seems Google can take take take but never give. Linux is free and was handed out before Google. Search was free before Google and now you sacrifice your identity for search?

        Try using startpage dot com. Google results without compromising your privacy.

        GFool just as all the iFools... Funny how Microsoft is the only company without some stupid crap like MMail or MChat or some other crap like that.

        I feel companies like Apple and Microsoft are in the right because they've worked hard to make the OS and GUI and so on... Google has done nothing relevant nor innovated anything aside of a search algorithm. I knew the moment that Google bought ad.doubleclick.net that things were not right with Google. A company listed as spyware and malware... Google picks them up? From that day forward I no longer used Google services aside of gmail for all those sign up crap for spam avoidance.

        From Wikipeida...

        DoubleClick is often linked with the controversy over spyware because browser HTTP cookies are set to track users as they travel from website to website and record which commercial advertisements they view and select while browsing. DoubleClick is considered to be malware by several commercial organizations (Adaware, Symantec, Spybot) which detect it and provide the tools to block/remove it.

        DoubleClick has also been criticized for misleading users by offering an opt-out option that is insufficiently effective. According to a San Francisco IT consulting group, although the opt-out option affects cookies, DoubleClick does not allow users to opt out of IP address-based tracking.
        kthnxbai
        audidiablo
      • RE: Why the FTC is likely to hit a dead end probing Google's Android

        @audidablo -- wrong.<br>have you used windows messenger from XP?

        No windows phone malware? What sane hacker is gonna attack less tahn 10% of the market share? Just like linux.
        Nobodys is gonna attack it because it JUST ISN'T WORTH IT.
        rockachu2
      • RE: Why the FTC is likely to hit a dead end probing Google's Android

        @anono MS pays Nokia US$1Bn to go with WP7. Does Google pay OEMs to use Android? I don't know the answer to that. If there is payment, MS and Google are in the same boat. If not, then not.

        Also, I strongly suspect that Google's mobile OS department was in the black -- based on ad revenue generated by handsets -- within a short time from launch. WP7 is not profitable, and it doesn't look like it's going to recoup investment for a long time.
        daengbo
    • RE: Why the FTC is likely to hit a dead end probing Google's Android

      @bannedagain
      Don't forget about price fixing, which keeps the competition out of fray. Google price fixed android to keep competing operating systems and services at bay. That would take major role in the investigation and I don't know how a senior editor like Larry missed it completely.
      Ram U
      • RE: Why the FTC is likely to hit a dead end probing Google's Android

        @Rama.NET
        How do you price fix something that is free? If manufacturers prefer to use Android due to it's zero cost and take a bigger profit, well good for them, and their shareholders.
        mschauber
    • RE: Why the FTC is likely to hit a dead end probing Google's Android

      @bannedagain what about MS and thier messenger, or apple and its safari? or MS and IE, or maybe even ubuntu and FF.
      Are we all gonna die for providing defaults?
      rockachu2
      • RE: Why the FTC is likely to hit a dead end probing Google's Android

        @rockachu2

        Apple has never forced another manufacturer to accept their defaults.

        Quite simply there are none, that is not their business model.

        You were doing quite well until you bought in Apple.
        bannedagain
  • RE: Why the FTC is likely to hit a dead end probing Google's Android

    Apart from Skyhook (which is obvious) you could also argue that Google use the riches from its web-monopoly to buy dmoniation in other areas like mobile. The "scorched earth" strategy to remove any oxygen for competitors - cleverly introduced by Microsoft.
    wreuch
  • Brush up on your antitrust law

    Larry, antitrust law is almost exclusively about acts committed by dominant companies that disadvantage others for no other reason than to harm competition. The fact that Firefox is available on Android doesn't tell you nearly enough about GOOG's behavior to pass judgment. Likewise, competition among GOOG licensees is very possibly good -- not bad -- for GOOG: Remember how OEMs were at each others? throats during the late 1990s, all to curry favor with MSFT? That didn't change the antitrust analysis one whit -- in fact, it made it much worse for Microsoft. Microsoft, Judge Jackson found, deliberately ?commoditized? the market for PCs in order to keep margins razor thin and bargaining power equally weak among the computer makers.

    And no, neither carriers nor manufacturers can tweak Android "as they see fit." Running Bing on Android here and there is not the same as open and competitive, any more than the presence of Netscape on Windows proved MSFT was playing fair with the market. (That was another key finding in US v MSFT, by the way.)

    No, the fact is we don't know all that Google is doing behind the scenes. We don't know what the evidence is, because what goes on in closed meetings is just that -- closed. For all we know, companies that are visiting with FTC have bushels of evidence not visible to outsiders ? again, just as it was with Microsoft.

    Nope, you're out of your depth here. Get with a real policy guy and start studying what the law actually says. Or maybe go back and read what the New York Times, Wall Street Journal, ZDnet and Cnet wrote back in the day. It might refresh your memory...
    farbuckle@...
    • RE: Why the FTC is likely to hit a dead end probing Google's Android

      @farbuckle@...
      +1
      Ram U