Google faces European antitrust probe into Android amid concerns over favoritism for its services

The European Commission (EC) is formally opening an investigation into whether Google (NASDAQ: GOOG) violated antitrust laws through the dominant position of its Android mobile operating system by favoring its own services. The probe came paired with an official accusation by the EC's competition chief that the search giant had abused its power in Web searches.

In the Android investigation, the EC will look at whether Google has "illegally hindered the development and market access of rival mobile operating systems, mobile communication applications and services" in Europe by forcing Android device makers to exclusively pre-install Google's own applications or services.

The probe from the EC, the European Union's executive arm, will also explore whether Google has forced device makers that use Android and want Google services into anticompetitive agreements by tying or bundling Google services like YouTube and Google Maps on Android with other Google services. Additionally, the probe will look at whether Google has prevented device makers from marketing and deploying forked versions of Android.

In the fourth quarter of 2014, Android had 81.5 percent of the global smartphone market, and the EC says that the majority of smartphones in Europe run Android. The EC notes that while Android is open-source and can be run without Google services (as Amazon (NASDAQ: AMZN) does with its Kindle Fire tablets and phone and as many Chinese device makers do), the majority of smartphone and tablet makers use Android in combination with a range of Google's proprietary apps and services. In order to obtain the right to install these apps and services, manufacturers need to enter into certain contractual agreements with Google.

The EC has been informally probing Android for nearly two years, following a complaint from FairSearch, an international coalition of 17 online search and technology businesses including Microsoft (NASDAQ: MSFT), Nokia (NYSE:NOK) and Oracle. The opening of formal proceedings does not prejudge the outcome of the investigation, the EC noted.

Google wrote in response that Android has been "a key player in spurring" competition and choice in the smartphone market, as apps have proliferated and smartphone prices have dropped while Android's market share has grown.

"Apps that compete directly with Google such as Facebook, Amazon, Microsoft Office, and Expedia are easily available to Android users," Hiroshi Lockheimer, Google's vice president of engineering for Android, wrote in a company blog post. "Indeed many of these apps come pre-loaded onto Android devices in addition to Google apps. The recent Samsung [Galaxy] S6 is a great example of this, including pre-installed apps from Facebook, Microsoft, and Google."

Lockheimer noted the EC has asked questions about Google's partner agreements. "It's important to remember that these are voluntary--again, you can use Android without Google--but provide real benefits to Android users, developers and the broader ecosystem," he wrote.

"Anti-fragmentation agreements, for example, ensure apps work across all sorts of different Android devices. (After all, it would be pretty frustrating if an app you downloaded on one phone didn't also work on your eventual replacement phone.)," Lockheimer added. "And our app distribution agreements make sure that people get a great 'out of the box' experience with useful apps right there on the home screen (how many of us could get through our day without maps or email?). This also helps manufacturers of Android devices compete with Apple, Microsoft and other mobile ecosystems that come preloaded with similar baseline apps."

Lockheimer said the agreements with device makers are not exclusive, and Android manufacturers install their own apps and apps from other companies as well. He also wrote that in comparison to Apple (NASDAQ: AAPL) there are far fewer Google apps pre-installed on Android phones than Apple apps on iOS devices.

Earlier this month a U.S. lawsuit alleging that Google was harming consumers by forcing handset makers to use its own Android apps as the default options in smartphones was withdrawn by the plaintiffs.

The two plaintiffs, Gary Feitelson and Daniel McKee, withdrew their case against Google after U.S. District Judge Beth Labson Freeman in February ruled that they hadn't shown that they had been forced to pay higher prices due to Google's strategy.

For more:
- see this EC statement on Android
- see this separate EC statement
- see this Google blog response on Android
- see this separate Google blog response
- see this NYT article 
- see this Bloomberg article

Related Articles:
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Google sidesteps lawsuit over its Android apps
Microsoft strikes deal with Samsung, other Android OEMs, to pre-load its services
Android rival Cyanogen raises $80M from Qualcomm, Twitter, Rupert Murdoch and others
IDC: Android, iOS crushing Windows Phone, BlackBerry in smartphone market

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