State of Digital readers in the know are already familiar with a number of events relating to antitrust cases against Google for its practices on Android. Since 2013, this topic has drawn our public attention as search advertisers, as mobile app developers, as handset manufacturers, and most importantly, as users. A number of investigations in different jurisdictions worldwide question whether Google’s restrictions on Android breach competition laws. At the core of the subject lies concern over the future of the mobile ecosystem, including platform development, innovation and consumer choice. In recent news, we have seen updates in the EU and Russia and new concerns arising in other jurisdictions. In the EU, Google recently asked for a final deadline extension to respond to the EU Commission’s statement of objections, which was granted until October 7th. Over a week ago in Russia the FAS officially dismissed Google’s request for an extension to change their practices in Russia. Google is now required to commence execution of Russian FAS decisions or face additional fines for incompliance. In the past week Japan’s Ministry of Economy, Trade and Industry also alleged that Google’s practices undermine competition in the smartphone app market. As Russia’s number one search provider and one of Europe’s largest Internet companies with a focus on empowering the consumer with choice, Yandex has been involved with both the Russian and EU case. Given the timely topic, involvement of Yandex, and similarity of these particular cases, I’m taking this opportunity to clarify developments with the cases that otherwise haven’t been summarized together.
Investigations into Google’s practices on Android:
Androids overwhelming popularity make these investigations especially important and relevant in the EU and Russia. Starting in 2013, Yandex first made submissions to the European Commission that has been investigating this topic since FairSearch filed a similar complaint against Google the same year. The EU opened a formal investigation in April 2015, which outlined the following major interests: licensing of Play under condition that Google Chrome is pre-installed and Google search is set as a default search service, anti-fragmentation agreements that prevent consumers from access to other potential operating systems, and exclusivity of Google search pre-installation with manufacturers. Back in February 2015 Yandex submitted a request to the Russian Federal Antimonopoly Service (FAS) to investigate Google’s restrictive practices on Android. The request focused on Google tying its mobile search engine and other end-user applications and services with its Google Play mobile application store for Android OS. In particular, in 2014 Google prohibited pre-installation of any Yandex services on Fly, Explay, and Prestigio mobile devices in its agreements with respective Android device manufacturers. These pre-installation restraints were not limited to specific Yandex applications competing with Google apps but all Yandex applications. Investigations in the US , South Korea, and most recently, Japan question Android practices for various reasons.
Russian FAS Decision & European Commission Statement of Objections:
The case filed with FAS resulted in the historical September 2015 decision that Google did break Russian antitrust laws through their abuse of dominance by providing Google Play to handset manufacturers under the conditions that a bundle of other applications would be pre-installed on certain beneficial terms. As a result, last month, FAS also fined Google $6.8 million for violation of Russian competition laws. As per FAS remedies order, Google is now obligated to adapt its practices in Russia as outlined by FAS. Device manufacturers that are producing Android-operated smartphones and tablets for the Russian market should be able to obtain Google Play from Google without any restrictions but also be entitled to:
- Pre-install Google Play without any other applications and services by Google
- Set another search engine as the default, including on the default home screen;
- Select apps and services for pre-installation at their own discretion;
- Place any other applications and widgets on the default home screen, including search
- Enter into deals with developers of apps and services by Google’s competitors to replace any of the pre-installed Google’s apps, including Google Search, without restrictions.
In the case of the EU, Google has until Octover 7th to respond to the Commission’s April Statement of Objections alleging 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 below image published by the EU Commission outlines their concern. In Russia, Google is running out of extensions to respond and is under pressure to make adaptations while more developments are anticipated in the EU and elsewhere.
Impact of the Android Antitrust Cases:
Since the FAS ruling, minor progress developed in regards to Android dynamics in Russia. While there haven’t been any changes relating to Google’s bundling practices, there are new distribution deals and some adaptations with the strictness of exclusivity agreements. For Yandex, these new distribution deals allow Yandex apps to be installed on the second and third screen of Android phones and in very limited cases, pre-loaded on the default home screens. The change in exclusivity agreements has positively impacted the general ban on all Yandex apps. Both cases are setting an example for increased global recognition of an ongoing issue of unprecedented market power and control gained by owners of global mobile platforms. The ruling in Russia demonstrates a historical event that a fair and reasonable solution to the problem is achievable. To date, the EU and other cases have brought more attention to the topic. According to a press release from the European Commission, Commissioner Margrethe Vestager, in charge of competition policy, explained the weight of the case in the EU, “A competitive mobile internet sector is increasingly important for consumers and businesses in Europe. 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. These rules apply to all companies active in Europe. Google now has the opportunity to reply to the Commission’s concerns.” As we await change and Google responses, it’s important to remember the focus of these cases irrespective of any politicized or sensationalized stories. Google is a well-respected company that has quite clearly brought significant value to the Internet ecosystem and set many positive examples but there must be opportunity for others to do the same. These cases are not unique to Yandex but of course relevant to other app developers and handset manufactures. Regardless of a tech company’s global reach or size, the Internet ecosystem should provide fair opportunities for all businesses to offer their products and services in addition to choice for the consumer. Especially in today’s globalized world and interconnected online community, the gravity of these cases comes down to ensuring widespread equality.