Reports out today from the The Washington Post and Reuters say that the European Commission (EC) is readying a second multibillion-euro fine against Google parent Alphabet. Beyond the fine, the EC will likely demand changes in the company’s rules for phone makers using Android.
Currently, Android handset makers, such as Samsung, must comply with certain requirements surrounding pre-installation of selected Google apps (e.g., search, maps, YouTube) if they want to provide access to the Google Play app store. The EC regards this practice as anti-competitive. Google also faced a similar though less costly rebuke in Russia over the same issue.
While nothing is certain until formal announcements are made, if Google is compelled to discontinue app pre-installation rules, it remains to be seen how the company and its services will be impacted. My guess would be not much.
Years ago, Microsoft was required to stop bundling its Explorer browser with its Windows operating system and give consumers “browser choice.” Google has rejected this comparison in the past. However, something similar might be required here.
For example, a setup process might ask people to choose a search engine or a mapping application from among several competitors. In such a hypothetical scenario, Google could still win because its apps are highly successful and better known than competitors’ in most cases. Alternatively, no search engine or mapping or video apps might be pre-installed. In another scenario, device makers could potentially sell “default” app slots to the highest bidder as a way to generate additional revenue for themselves.
If a new fine comes to pass, it will be the second major penalty suffered by Google in two EU antitrust cases. A third potential action in Europe is still pending over AdWords contracts.
Last year, Google was fined more than $2.7 billion for “abuse of market position” in shopping search. Yelp is now seeking to have the EC extend the logic of that decision into the arena of local search.
Google is appealing the first penalty and could similarly appeal any adverse outcome in the Android case. However, it will be required in the interim to comply with the EC’s directive and make changes. The company has maintained that its practices are designed ultimately for the benefit of consumers and are not anti-competitive.
US president Trump’s visit to Europe is likely to delay any announcement until after its conclusion, according to the reports.
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