Europe starts antitrust proceedings with Google over Android

Billions of dollars in fines are at stake.

Reuters / Francois Lenoir

The day Google feared has finally come: The European Commission has filed formal charges against the search giant for anticompetitive behavior related to Android. The European Union's commissioner for competition, Margrethe Vestager, has been officially probing the platform, trying to establish whether Google was abusing its dominant position in the market by preventing or hindering competitors from developing Android forks, rival applications and services. Almost exactly a year after formally opening the investigation, Vestager has decided the answer to those three questions is essentially yes.

In a Statement of Objections issued today, the European Commission says that Google breached 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;" by "preventing manufacturers from selling smart mobile devices running on competing operating systems based on the Android open source code;" and by "giving financial incentives to manufacturers and mobile network operators on condition that they exclusively pre-install Google Search on their devices."

The statement goes into more detail on each point. It says Google makes companies sign contracts that require the Play Store to be pre-installed on devices in order to access search as well as contracts that require Chrome to be pre-installed on devices in order to access the Play Store. Tangling the services together ensures, for example, that Chrome "is pre-installed on the significant majority of devices sold in the EEA."

The commission calls out an "Anti-Fragmentation Agreement."

Interestingly, the commission calls out an "Anti-Fragmentation Agreement," which companies must sign if they want Google's apps, that prevents them from selling any device running an Android fork. It also says that Google "has granted significant financial incentives to some of the largest smartphone and tablet manufacturers as well as mobile network operators on condition that they exclusively pre-install Google Search on their devices," although it does not give any concrete figure regarding those incentives.

It goes on to note that there's no issue with financial incentives but rather "with the conditions associated with Google's financial incentives, in particular with the condition that the financial incentive is not paid if any other search provider than Google Search is pre-installed on smart mobile devices."

Google was obviously prepared for this day. It released a response within seconds of the Statement of Objections, titled "Android's Model of Open Innovation." In it, Google says Android is offered in a "careful way" that's ultimately "good for competition and for consumers." We've reached out to the company for more reaction to the decision and will update this article with any further information we receive.

Today's announcement doesn't affect Europe's other antitrust case against Google. The commission laid out its objections last year to Google's search practices, specifically that it uses its enviable position to push users toward its own services like Google Shopping.

President Obama has all but accused the EU of protectionism.

That probe has drawn the ire of many in the US, including President Obama, who all but accused the EU of protectionism. Speaking with Recode, Obama said that "sometimes the European response here is more commercially driven than anything else." He added that "oftentimes what [are] portrayed as high-minded positions on issues sometimes [are] just designed to carve out some of their commercial interests." It's unlikely that Obama, or any other detractors, are going to be pleased with the commission moving forward with a second case.

If you want an idea of how fast these investigations move, the Google Shopping case has been in the works for over six years now. Vestager prefers to work with companies rather than against them, using the threat of 10-figure fines to persuade them into changing behavior. (With the two cases combined, Google's actually facing an 11-figure fine closer to $15 billion). Expect Google and the EU to argue a lot about the details and eventually come to an agreement sometime next decade.

Update: Vestager has given a full statement explaining some of the reasoning behind today's decision in more human language than the official Statement of Objections. You can read the whole thing yourself, but here are some choice excerpts:

"Smartphones and tablets play a key role in our lives. Every day we use them to read the news, shop online and check the weather forecast. About 80% of those devices in Europe and the world run on Android. This number is even higher for smartphones and tablets in the lower price range, which the majority of European consumers buy."

"Google has shares of over 90% in Europe in the markets for general internet search services, licensable smart mobile operating systems and app stores for the Android operating system. This is, as such, not a problem under EU competition law. However, dominant companies have a responsibility not to abuse their powerful market position by restricting competition."

"Our preliminary view is that Google has abused its dominant positions in these three markets. Its strategy to protect and strengthen its dominance in general internet search has two main elements: First, the practices mean that Google Search is pre-installed and set as the default, or exclusive, search service on most Android devices sold in Europe. Second, the practices close off ways for rival search engines to access the market, via competing mobile browsers and operating systems."

"If the Commission comes to the conclusion that EU antitrust rules have been breached, companies have to change the way they do business and may face fines. This is necessary to effectively protect European consumers but, of course, also means that the rights of defence of the company concerned must be fully respected."

"To be clear, this is an interim step and not the end of the road - Google now has 12 weeks to respond, and it also has the possibility to request an oral hearing to present its views. I will carefully consider Google's arguments before deciding how to proceed."