EU issued record fine against Android, but what’s the collateral damage?
Europe made headlines last week by announcing the biggest antitrust fine in history on a case that could also be a contender for the smallest victory for consumers.
The European Commission missed the forest for the trees when it set the parameters of their legal investigation into Android devices — which for consumers is often a cheaper, viable competitor to iPhones.
The starting point of the investigation should have been the obvious: immense mobile ecosystem competition between Google’s Android and Apple’s iOS.
Instead, it unnecessarily narrowed its investigation to only one particular company which offers a flexible, competitive open-source platform. Over the last few years, Android has increased smartphone competition — with consumers benefiting from greater innovation and less expensive choices.
The Google apps offered on Android phones are a way to compete on user experience and to fund a business model that does not rely on device sales. The Android business model is a good deal for consumers and it it hard to see how consumers will benefit from the Commission’s decision.
Even though European antitrust law differs from the U.S., it is always useful for regulators to focus their attention on what benefits consumers. If regulators were to view this market from a consumers’ perspective, they would see that Android would appear to have a following from those who appreciate more control over their mobile phones. You don’t have to understand all the technology to understand Android is a sort of hybrid business model solution that tries to balance openness with interoperability.
Essentially the European Commission either didn’t understand or chose to ignore what it takes to compete with a free, open source operating system when your competitor is no less than the iconic Apple iPhone. Just like all open source software, Android runs the risk of fragmenting, which for consumers means their applications not working well. Consumers and app developers alike need fragmentation kept to a minimum. If your system is too fragmented, app developers will leave you. Remember what happened to Nokia’s Symbian? To punish Google for its anti-fragmentation effort is equal to punishing it for making sure there is more interoperability in the market. From a competition point of view, that just doesn’t make sense.
The European Commission focused on Android phones coming with pre-installed apps. But it seemed to forget what it said when it approved the Microsoft/Skype merger in 2011. While pre-installation may have been an issue in the Commission’s 2004 Microsoft case, it noted that it was no longer an issue — because of the ease with which consumers can download alternatives.
Android handset makers are not forced to pre-install Google’s apps and they can freely license the Android operating system whatever they decide to do. Consumers also can download as many apps as they like or disable any apps on their devices they don’t like — and they are doing so.
My international trade association is passionate about competition in the tech sector. We worked closely with regulators to support the Justice Department’s case against IBM and later the breakup of AT&T and also with transatlantic officials in actions against Microsoft.
But my association cannot credibly argue that the European Commission’s Android action will improve choices for consumers or competition in the mobile phone market. Instead, it selectively investigated and punished one of the most successful and flexible business models in the mobile economy — and a product that is popular with consumers.