EU vs. Google’s Android: What’s at stake, and what about Apple’s iOS?

As expected, European officials on Wednesday filed formal charges against Google over Android, accusing the company of abusing its dominance of the world’s most used mobile operating system.

Here’s a breakdown of a couple of notable angles.

What’s at stake

What’s Android worth to Google, anyway? It’s hard to tell because Google doesn’t break out its Android revenue. Recent reports give a hint, perhaps anywhere from $31 billion to $45 billion. But the first figure is secondhand and it’s unclear over what time period it’s based on; the second figure is an analyst’s estimate of how much Android brought in during the past five years. A separate estimate, by research firm eMarketer, says Google is set to make $34 billion in mobile-ad revenue this year.

The European investigation could lead to fines of up to 10 percent of the company’s annual global revenue for each of the charges — remember, one year and five days ago, the EU charged Google with abusing its dominant position in search, and the outcome of that case is still pending. Last year, Google raked in nearly $75 billion in sales, so there’s a possibility of a $7.5 billion fine in each of the two cases.

It’s also worth noting that Microsoft and Intel each have had to to pay more than a billion dollars each in fines in previous European antitrust cases.

Setting aside what could be the biggest European antitrust fine ever, the case could change the way Google makes money off Android.

“The most extreme consequence is some sort of unbundling or separation of Google Services from Android,” James Cakmak, an analyst at Monness Crespi Hardt & Co., told Bloomberg. “Limiting your ability to collect data would limit your ability to target users, which is what Google does — get the right ad in front of you at the right time.”

Why Android? What about Apple?

Android is open source and licensed for use by many phone and mobile-device makers. The EU is accusing Google of imposing licensing terms that favor its services, including requiring manufacturers to pre-install Google Search in order to pre-install Google’s Play Store, and also of requiring the pre-installation of the Chrome browser. The commission also said Google “provides financial incentives” to manufacturers and phone operators to pre-install Google Search. All this is hindering competition, the EU is claiming.

Google says its ability to provide Android for free is helped by the revenue it makes from its apps and services.

“Of course while Android is free for manufacturers to use, it’s costly to develop, improve, keep secure, and defend against patent suits,” Kent Walker, Google’s general counsel, said in a blog post today. Walker also pointed to the popularity of non-Google apps and said it’s easy for mobile-device users to download the apps they want.

Is Android’s openness the source of the scrutiny? “The EU Commission would not be making these allegations against Google if it had not committed to developing Android as an open platform that anyone can build applications for and customize,” the Information Technology and Innovation Foundation, a technology policy think tank, said in a statement today. “But companies who develop open platforms should not be held to a higher standard than those developing closed platforms.”

Apple’s iOS is a closed platform — the company controls which apps are pre-installed on it, which apps are allowed in the App Store, etc. Why isn’t European Antitrust Commissioner Margrethe Vestager going after iOS?

It’s in the numbers. In Europe, 80 percent of smartphones run on Android, according to the EU’s statement of objections. That figure is the same for Android’s market share worldwide, compared with nearly 18 percent for Apple’s iOS, according to Gartner. Research firm IDC says the market share for iOS in Europe is 23.5 percent.

 

 

Photo: A woman uses an Android smartphone in Brussels on Wednesday, April 20, 2016. (AP/Geert Vanden Wijngaert)

 

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  • Kelvin

    I think this whole EU anti-trust against Google’s Android is bit ludicrous. Google does not charge OEM or end customers any fees for using Android and their only way to make money is through the use of their build-in apps on the Android mostly from mobile ads. Secondly, Google is not even preventing OEM from installing own apps on top of what Android already available; Google is only providing incentive for OEM if they only pre-installing only Google’s own apps alone by giving them money in doing so. Third, Android is open source software, anyone can in fact develop their own forked version of Android and use it on their own hardware and thereby install whatever apps they pleased. In fact, Amazon and Barnes and Noble have already done so as well as numerous Chinese OEM device manufacturers. No reason for any EU OEM device manufacturers to not be able to do the same thing.

    The way I see it that Google should not do is possibly not provide the money incentive to OEM for only including pre-installed Google apps. This might possibly be perceived as an anti-competitive practice. That’s pretty much it.

    What EU is essentially asking Google to do is that Google need to provide their software and complete development support of Android for use by OEM and end customers absolutely free with no strings attached or they will be fined.

    Keep in mind that I am not even a big Google Android supporter myself. I personally prefer to use Apple’s iOS; but the whole thing just seemed unfair. On top of that, during the trial where Oracle is still suing Google for the use of the Java, information was provided that Google in fact makes more of their mobile revenue from the iOS devices than their own Android platform. So the amount listed in this article does not even come close to what Google actually made from their Android platform.

    I think the whole irony of the situation is that even though Android devices clearly dominate the overall devices and usage, it is Apple who dominates the actual profit share of the mobile devices. But since Apple does not physical dominate majority of the devices just profits, EU can’t really complaint about Apple’s iOS devices as monopolizing the market place. In hindsight, Apple should actually thank Google for introducing Android instead of been angry with them all these years because Google provided them with the perfect excuse to not be sued as a monopoly in the mobile market even though they technically owns most of its profit.

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  • Thelip95032

    So basically the EU is extorting money from Google because no one in their domain has invented anything that is in high demand. This sucks , no different than some sticking a gun in your face on the street corner and demanding your money. I’m a long time Apple user but think this stinks.

  • Flytrap21

    Why isn’t European Antitrust Commissioner Margrethe Vestager going after iOS?

    The answer to this question is already in the article (that is the problem with copying and pasting other peoples work without fully understanding it)

    The EU is accusing Google of imposing licensing terms that favor its services, including requiring manufacturers to pre-install Google Search in order to pre-install Google’s Play Store, and also of requiring the pre-installation of the Chrome browser. The commission also said Google “provides financial incentives” to manufacturers and phone operators to pre-install Google Search. All this is hindering competition, the EU is claiming.

    Apple does not license iOS to anybody… Apple does not impose licensing terms that force licensees (e.g. AirPlay, made for iDevice connectors, Lightening interface chips, HomeKit home automation, etc.) to favour its services over those of others… Apple does not force or bribe provide financial incentives to other phone manufacturer to favour their services over those of competitors – on the contrary, Apple does not want other phone manufactures fiddling with their services, they want them to build their own (remember the cat and mouse game with Palm Inc, when they kept reverse engineering iTunes integration into WebOS)

 
 
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