The European Commission (EC) has claimed that Google has breached antitrust rules by imposing restrictions on Android device manufacturers and mobile network operators.
The EC said it has informed Google of its "preliminary view" that the search giant has "abused its dominant position by imposing restrictions on Android device manufacturers and mobile network operators", and has broken EU antitrust rules.
Commissioner Margrethe Vestager, in charge of competition policy, said: "Based on our investigation thus far, we believe that Google's behaviour 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." Vestager revealed she was "looking closely" at deals Google made with phone makers and operators on Monday.
The Commission said it considers that Google is dominant in the markets for general internet search services, licensable smart mobile operating systems and app stores for the Android mobile operating system. Google generally holds more than 90 percent market share in each of these markets in the European Economic Area.
Specifically the Commission alleges that Google has breached EU antitrust rules by:
- requiring manufacturers to pre-install Google Search and Google's Chrome browser and requiring them to set Google Search as default search service on their devices, as a condition to license certain Google proprietary apps;
- preventing manufacturers from selling smart mobile devices running on competing operating systems based on the Android open source code;
- giving financial incentives to manufacturers and mobile network operators on condition that they exclusively pre-install Google Search on their devices.
The Commission said it believes that these business practices strengthen the dominant position of Google in internet search, and affect the ability of competing mobile browsers to compete with Google Chrome.
It said Google's practices could also hinder the development of operating systems based on Android's open source code and the opportunities they would offer for the development of new apps and services.
"In the Commission's preliminary view, this conduct ultimately harms consumers because they are not given as wide a choice as possible and because it stifles innovation," it said.
The Commission said that in its contracts with manufacturers, Google has made the licensing of the Play Store on Android devices conditional on Google Search being pre-installed and set as default search service. As a result, rival search engines are not able to become the default search service on the significant majority of devices sold in the EEA. "It has also reduced the incentives of manufacturers to pre-install competing search apps, as well as the incentives of consumers to download such apps," the Commission noted.
Similarly, in its contracts with manufacturers, Google also required the pre-installation of its Chrome mobile browser in return for licensing the Play Store or Google Search.
"Browsers represent an important entry point for search queries on mobile devices. Thus, by reducing manufacturers' incentives to pre-install competing browser apps and consumers' incentives to download those apps, competition in both mobile browsers and general search has been adversely affected," the Commission said.
The Commission also claimed that if a manufacturer wants to pre-install Google proprietary apps, including Google Play Store and Google Search, on any of its devices, Google requires it to enter into an "Anti-Fragmentation Agreement", under which it commits it not to sell devices running on Android forks.
"Google's conduct has had a direct impact on consumers, as it has denied them access to innovative smart mobile devices based on alternative, potentially superior, versions of the Android operating system," it said.
Google has also granted "significant financial incentives" to some of the largest smartphone and tablet manufacturers, as well as mobile network operators, to exclusively pre-install Google Search on their devices, the Commission said.
"Google has thereby reduced the incentives of manufacturers and mobile network operators to pre-install competing search services on the devices they market. In fact, the Commission has evidence that the exclusivity condition affected whether certain device manufacturers and mobile network operators pre-installed competing search services," the Commission claimed.
Google said it took the European Commission's concerns seriously but said its business model keeps manufacturers' costs low and their flexibility high, while giving consumers unprecedented control of their mobile devices.
Google senior vice president and general counsel Kent Walker 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 to demonstrate that Android is good for competition and good for consumers."
Google pointed out that while Android is free for manufacturers to use, there is a cost to Google to "develop, improve, keep secure, and defend against patent suits", and said it offsets these costs through the revenue it generates on the Google apps and services distributed with Android.
The company noted that its partner agreements "are entirely voluntary" and that anyone can use Android without Google.
Manufacturers who want to participate in the Android ecosystem commit to test and certify that their devices will support Android apps, Google said: "Any manufacturer can then choose to load the suite of Google apps to their device and freely add other apps as well. For example, phones today come preloaded with scores of pre-installed apps (from Microsoft, Facebook, Amazon, Google, mobile carriers, and more)."
A statement of objections is a formal step in Commission investigations into suspected violations of EU antitrust rules, but there is no legal deadline for the Commission to complete antitrust inquiries into anticompetitive conduct.