Vestager vs. Google: a fight to ensure a competitive innovation framework

Press conference by Margrethe Vestager, Member of the EC, on Interim Report of the State aid Sector Inquiry on Capacity Mechanisms
Date: 13/04/2016. Location: Brussels — EC/Berlaymont. © European Union, 2016 / Source: EC — Audiovisual Service / Photo: Georges Boulougouris.

The EU Consumer and Competition Day took place yesterday in Amsterdam with Margrethe Vestager to reveal her will to charge Google for exploiting consumers by pre-installing Android apps on their smartphones.

European Commission (EC) is showing its teeth once again, after Microsoft antitrust case a decade ago, against giant tech companies which are finding ways to increase their sales revenues using anti-competitive practices.

Innovation: Commission’s top concern

Margrethe Vestager, European Commissioner for Competition, mentioned at the conference “Fading borders, shifting roles? Innovation inspired policy and regulatory oversight in the digital economy” that the Commission should ensure a competitive innovation framework between large and small corporations. More specifically, Mrs Vestager said: “We need to be sure that big companies don’t try to protect themselves by holding back innovation. Our concern is that, by requiring phone makers and operators to pre-load a set of Google apps, rather than letting them decide for themselves which apps to load, Google might have cut off one of the main ways that new apps can reach customers.”

Google is facing charges of 7.4 billion dollars if found to be guilty for abusing the market. This clearly signifies that Europe is not the ideal place to make business as many large corporations might have though. Thus, Google is forced to make business by complying with the European competitive laws or pay the price; or leave the continent.

Google’s response

The American multinational company is discussing the issue with the Commission and states that Android, Google’s operating system, is not holding back innovation but on the contrary is helping consumers. More in detail, Google told Digital Trends that: “Anyone can use Android, with or without Google applications. Hardware manufacturers and carriers can decide how to use Android and consumers have the last word about which apps they want to use on their devices. We continue to discuss this with the European Commission.”

Google has been taking more and more market share from its competitors. According to StatCounter data, two thirds of all mobile phones that are used in Europe this month were running on Android while iOS, Apple’s software accounts for 27%. These figures reveal the huge effect that Android has on European citizens’ lives. Consequently, it is of great importance that tech companies such as Google are monitored adequately by competition enforcers.

Fair competition creates innovation

The “healthier” way to innovate is by pure and fair competition. As Margrethe Vestager said during her speech at the EU Consumer and Competition Day: “Companies innovate because they have to. Because they’d fall behind their competitors if they stopped being inventive. So one of the best ways to support innovation is by promoting competition. That’s why we follow markets such as telecoms so closely, and pay such attention to making sure that competition stays strong in those markets.”

However, most of the times companies that are successful in their field do not welcome innovation because it can lower their market share and their revenues. By not allowing innovations to make it to consumers, these companies manage to keep their power.

News Corp. against Google

Google has become the target not only in Europe but also at the other side of the Atlantic. Hence, apart from the European Commission, News Corp. has filed a complaint about Google’s news services legality. Specifically, the owner of the media corporation accused the U.S. tech giant of lowering his company’s ad revenues by keeping Internet users on its own services showing enough content to prevent people from clicking onto the publisher’s site.

The EU against all

Previously the EU has managed to force Microsoft Corp. to pay billions of euros in fines in the past. Will the same happen with Google or the American multinational will probably find a way to slip out?

According to antitrust experts, the charges against Android are much easier to be proved by the EU since they are based on contracts where illegal behaviour is more apparent.

But even so, it’s surely not going to happen easily and rapidly. It is a procedure that usually takes time (years) and businesses are rarely found to be guilty.

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Originally published at europeansting.com on April 19, 2016.

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