If you or I got slapped with a $5.1 billion dollar fine, it would likely be a bit of a problem. That’s the number handed down to Google from the European Commission (EC) for what it calls illegal practices used to strengthen its internet search dominance through the Android mobile operating system. For Google, it’ll smart a bit having to hand it over, but with its cash reserves, it could pay up and forget all about it.
However, while the fine — the largest the European Commission has ever given — captures headlines, it’s the changes to Google’s practices the Commission is forcing that will have a far longer lasting impact, and may seriously change Android and the way it’s used around the globe. While Google will be anxious, rivals are pleased with the decision because it presents them with an opportunity that hasn’t been forthcoming. Which is actually the Commission’s point.
What does it all mean for you? Your next Android phone may not be the quite the same as it was before, and that’s both a good thing, and potentially a bad thing too. Why bad? Because Google’s response to the fine has been to impose a tariff on manufacturers wanting to use Google’s main suite of apps.
The end of an era
What happened? The EC found three areas where Google broke antitrust rules in Europe. The first is forcing companies that want to use Android and pre-install the Google Play Store to include its Chrome browser and Google Search apps, and not install alternatives. The second is illegally paying device makers to exclusively pre-install Google Search. Finally, preventing companies from using other, competing forked versions of Android if they are also selling Google’s Android on other devices. It’s Google’s way, and that’s it.
All this “cemented the dominance of its search engine,” said EC Commissioner Margrethe Vestager, and “denied rivals the chance to innovate and compete on the merits.” Google makes its money through ads, and a lot of crucial data comes from search. Google has 90 days to stop these practices deemed illegal by the EC, or face a daily fine of five percent of Alphabet’s annual turnover. Alphabet is Google’s parent company.
If you’re Google, then it’s a serious blow. CEO Sundar Pichai has written a lengthy defense of Android and its business model, saying it actually promotes choice, and that the decision will upset the “balance of the Android ecosystem.” Pichai warns that it’s this business model that has stopped Google charging fees to use Android, or tightening controls over the distribution model. This statement is key to Google’s response to the fine in Europe.
While Android is technically open source and anyone can use it, it’s only the Android Open Source Project (AOSP) that’s truly free. To install Android with Google Play and other Google apps, there are rules to be followed, and acceptance by Google to be secured.
The EC’s plan is to put an end to this, but it’s leaving it in Google’s hands to work out how. “It’s Google’s sole responsibility to ensure compliance,” it writes, and adds the decision is not made to, “prevent Google from putting in place a reasonable, fair, and objective system,” that stops Android from functioning, or Google services from operating. Like Braveheart, the EC has painted itself blue and is shouting, “freedom!” At Google, the doors to Android have got to open a little wider.
Poor Google, right? Told what to do by the evil commissioner. Turn to the reaction from competitors, and you’ll begin to understand why at first, it was Google and Google alone that was most upset by the decision.
“We welcome the EU cracking down on Google’s anti-competitive search behavior. “
Public policy head for Yelp, Kostas Rossoglou, tweeted, “Competitors, phone manufacturers, consumer groups, SMEs all applaud EU Android decision.” Oracle Vice President Ken Glueck’s quoted as saying it will, “undoubtedly unleash more choice for mobile customers … more opportunities … and more robust competition.”
However, both Oracle and Yelp are known Google detractors, so such a response is to be expected.
Similarly, the privacy-focused search engine company, DuckDuckGo, tweeted:
“We welcome the EU cracking down on Google’s anti-competitive search behavior. We have felt its effects first hand for many years and has led directly to us having less market share on Android vs iOS and in general mobile vs desktop.”
And Mozilla’s Chief Operating Officer, Denelle Dixon, emailed Digital Trends a statement.
“We are hopeful the result will help level the playing field for mobile browsers like Firefox, and to foster openness that creates and sustains competition and innovation.”
We won’t suddenly lose the ability to use Google apps, access the Play Store, or enjoy Android.
It’s these firms and many more that sense a considerable opportunity here. European consumer organisation BEUC tweeted that it agrees with the assessment that Google abuses its power, and this, “restriction of competition hurts European consumers.”
Not everyone is on the side of choice, with many of the hundreds responding to Vestager on Twitter questioning the decision. This professor and former European Union think tank member argues, like Pichai, that Android promotes competition, lowers prices, and avoids the Apple walled-garden scenario. Are they wrong? A little, because for consumers, competition is never a bad thing.
We still don’t know how Google will adapt to the ruling, as it has appealed the decision. In the meantime, to avoid the sting of any continued fines, it has made some rulings of its own. It intends to charge manufacturers in Europe a license fee to install certain Google apps, although which apps is not clear. The charge will vary from country to country, and from device to device. Devices with high-end specs — which Google may identify by screen pixel density — may have a $40 charge levied to use some Google apps.
Google will also stop sharing search-related revenue with manufacturers if Chrome is not pre-installed and placed by default on the home screen. It will introduce new separate licenses for individual apps. By introducing new fees and licenses, Google says it can continue to fund development of its apps and services, something that previously was possible due to the forced installation the Commission is denying.
We won’t suddenly lose the ability to use Google apps, access the Play Store, or enjoy Android. It will also remain open source, and “free.” Google’s response is designed to impact manufacturers, and attempt to bring them on its side, rather than see the EC ruling as a chance to ignore Google’s suite of apps and adopt alternative versions of Android.
For example Samsung, HTC, Sony, LG, or any other companies could decide to release a phone with Amazon’s Fire OS, or even produce and release a device with their own Android alternative. Like Tizen once was for Samsung. All of the above will still also carry on using Android — because why wouldn’t they — but they may see it as an opportunity to create alternative revenue streams.
Google wants to put a stop to that kind of thinking before it starts, hence putting a price on such freedom. Additionally, extra charges hurt manufacturers bottom lines, which may see several take Google’s side in the fight against the decision. Worst case scenario, the manufacturers pay the new Google fees and pass the costs on to us by raising their prices.
Change is coming
Google is being forced to change something that has made it a lot of money, and given it a massive amount of power and influence. It is understandably mad about it. How it affects us is still unclear, although when manufacturers suddenly to pay out more money, it doesn’t often end well for you and me. None have to pay, of course; but this leads to the nightmare scenario where we get operating systems designed by manufacturers, which have always been universally awful.
This is incredibly unlikely, because everyone will simply buy an iPhone instead. Remember, Google and Android phone makers will almost certainly be looking over its shoulder at Apple whilst deciding any ultimate course of action here. The fight has only just begun, and it’ll take a while for the legal teams to sort out the appeal. By not asking to put a hold on the EC’s ruling in the meantime is also a tactical move, as it allowed Google to give manufacturers a taste of the financial burden that will fall on them with the rules.
The appeal may or may not change everything again, depending on the outcome. However, what we can be certain of is some alterations are coming to Android, at least those devices sold in the European Union, in the near future. Right now we shouldn’t be mad about it, because Google and phone manufacturers are getting the bad end of the deal. There has never been a more competitive time in the smartphone business, and there will be reluctance to charge phone buyers even more. Provided level heads prevail inside phone companies, we may come out of this with more choice next time we go to buy a new device.
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