Europe is an antitrust outlier

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Last week, the Canadian Competition Bureau concluded a multiyear antitrust investigation of Google after finding that the company had not engaged in anticompetitive behavior. The U.S. Federal Trade Commission had earlier reached a similar conclusion. Apparently, these findings do not faze the European Commission, which is going full speed in the opposite direction and adding to its list of charges against the internet search giant. The international coordination of antitrust enforcement still has a ways to go — and Europe is an outlier.

{mosads}The EU is already well down the road in its case against Google’s search practices. The new case announced last week targets Google’s Android operating system. As outlined in its “Statement of Objections,” the European Commission believes Google has “abused its dominant position by imposing restrictions on Android device manufacturers and mobile network operators” in order to “preserve and strengthen its dominance in general internet search.” According to European Commissioner for Competition Policy, Margrethe Vestager, “Google’s behavior denies consumers a wider choice of mobile apps and services and stands in the way of innovation by other players.”

Her assertion flies in the face of all the evidence.

First, and notwithstanding the questionable market share figures the European Commission has produced, Android faces major competition from Apple’s iOS. Moreover, although their market shares are small, Microsoft and Blackberry both have substantial resources that provide at least some competitive pressure.

Second, the practices that concern the European Commission are far more likely to benefit than to harm consumers.

The European Commission is concerned that Google requires manufacturers who want to preinstall Google’s Play Store (the app store for Android) also to preinstall Google Search and the Chrome browser. It’s hard to believe that consumers don’t value having those apps. Indeed, without this baseline suite of services that enables consumers to use their devices “out of the box,” it would be difficult for Android to compete against Apple iOS, which comes with an abundance of preinstalled apps and Apple controls closely.

Moreover, Google doesn’t require manufacturers to preload any apps; they can sell devices without any Google apps preinstalled, although the app store and other apps are what make the phone worth having. Perhaps more importantly, manufacturers can install other apps, including apps that compete with Google’s. And, of course, consumers can easily download apps, and do so all the time.

The European Commission also alleges that Google prevents manufacturers from selling devices that run on competing Android operating systems (so-called Android “forks”). This assertion seems to be false. Manufacturers can and do sell such devices. Amazon’s Fire tablets, for example, run on an Amazon-modified Android fork.

Google does not permit manufacturers to preinstall Google-s proprietary apps on such devices, a restriction that seems reasonable to ensure that Google apps function properly when consumers first activate their devices. The desire of manufacturers running competing systems to preinstall Google apps is further evidence that users want those apps. It hardly seems consistent for the European Commission to simultaneously argue that Google hurts consumers by requiring manufacturers to include certain preinstalled apps and also by prohibiting them from doing so.

Finally, the European Commission does not like Google providing financial compensation to manufacturers that do not preinstall search engines other than Google’s. Manufacturers, however, are not required to enter into these agreements, and sharing the ad revenues from Google Search with manufacturers and/or service providers would seem to benefit, not harm, consumers. Blocking this revenue source for manufacturers and operators, as the European Commission presumably wants to do, would likely cause consumers to pay higher prices for their devices and service.

Antitrust laws should benefit consumers. Google has created a popular smartphone platform with an operating system and apps, all available for free. The EU’s antitrust action against Google threatens to upend a business model that has benefited consumers, device manufacturers and app developers. Without Android, it’s safe to say, that market would be substantially less competitive. The European Commission should get on the same page as other competition authorities and drop this case.

Lenard is president and senior fellow at the Technology Policy Institute.

Tags Android antitrust Chrome EU European Commission European Union Google IOS operating system search engine
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