European Union (EU) vs Google: This is not going to go the way you think, EU

The European Union has fined Google €4 billion for acting, in what it says, is an anti-competitive way. This does not come as a surprise; the EU has a history with big US tech companies. One is reminded of its high-profile battle with Microsoft that resulted in a fine.

Google’s “crime” is to use its dominant market position with respect to the Android operating system to force mobile handset manufacturers to install proprietary Google apps. For example, the likes of Samsung and LG must include Google’s Chrome web browser on all their handsets. This is very similar to how Microsoft got in trouble for making PC manufacturers include its web browser (Internet Explorer) on their Windows products.

While these two cases may seem almost identical, there are differences and perhaps something should have been learned from the EU/Microsoft encounter many years ago.

Android is open and free – so Google can get rich

Android has been enormously successful. 10 years ago, Apple had 90% of the smart phone market, now android has over 90%. Android doesn’t just serve the high-end of devices (like Apple) but all the way down to feature phones.

This success has been achieved in two ways:

  • Google made Android available for free with no license fees to manufacturers or end-users – good for customers
  • Android can be (and has been) customised by handset vendors to create differentiation in a crowded and competitive market – good for vendors

Of course, Google wanted something from Android and it got it – by running Google apps, all these devices were providing Google with user data that it has been able to monetise through other services such as ads.

It’s not all been good for the customer or developer…

Android has not had it all its own way, there have been challenges and criticisms – most notably to do with security. Some of this comes from the openness and flexibility of the OS.

Google has recently gone a long way to address many of the concerns but there has been one major issue that is relevant to the EU’s ruling: Because handset manufacturers have been able to customise Android there has been fragmentation within the ecosystem.

A user of one Android device may get a very different experience if they pick up another. Developers building apps have had to deal with the same challenge – manufacturers adding and removing OS capabilities and launching proprietary features that developers can use but that will only work on that vendor’s devices.

The customisation from a user perspective has not always been good, making for a poor user experience. Also, most users are not running the latest Android and therefore more susceptible to security issues or unable to run newer apps.

… But, Google and friends have been getting their act together

These issues have been recognised and Google, in partnership with manufacturers, has been working towards a rationalised Android experience. The customisation of the OS has not been as beneficial to the vendors as they perhaps hoped, and they now recognise that letting Google handle the user experience is probably better for them.

On one hand we have fragmentation of Android being recognised as a problem for many in the ecosystem (Google, manufacturers, developers, customers), and efforts to resolve that by moving towards a singular Android controlled by Google. On the other, there is the EU effectively, although not explicitly, trying to prevent such a change.

While one can see the logic in the EU’s position and the consistency with respect to previous fines, perhaps in this case the EU has misunderstood what is best for the market – most importantly customers and other tech firms that it claims it’s protecting.

Why Google isn’t Microsoft

There are issues that the EU could have better considered that make this situation different to the Microsoft case.

  • Many tech firms have benefited (rather than be harmed) from the open nature of the Android platform. Android is not the walled garden that Windows was.
  • For competitors to Android (good luck with that), the challenge is not really a technical issue and trying to curtail what Google does on the platform will not lead to competition for the OS. Microsoft did have more significant competitors to Windows and IE.
  • The customisable nature of Android means that customers can choose to uninstall Google apps and use alternatives (I myself use Edge instead of Chrome, Outlook instead of Google’s mail client, Office instead of G-suite, and so on). This is not like the days of experts in court trying to show how Internet Explorer could (or could not) be uninstalled from Windows
  • Android is itself a counterbalance to another massive market player – Apple. Without Android, one could argue that Apple would utterly dominate the mobile market and its OS is closed and tightly controlled by Apple. Microsoft was not a counter balance to anyone.

How did that thing with Microsoft turn out?

Perhaps the EU should have learned from its experience with Microsoft. It made the same argument, that making manufacturers ship Windows PCs with its proprietary browser was anti-competitive and squeezed out competitors.

Back then, the competitors were mainly small organisations such as Netscape and Mozilla. There was a full-on browser war happening and many people (developers and customers) were supporters of browsers like Netscape (I loved it!) and Firefox. The EU could easily claim that it was fighting on the side of the little guy against the evil empire.

The EU won that war and Microsoft has since lost its dominant position in the browser market. But it has not been taken by Netscape (who are no more) or Firefox (who’s share remains small) but by Chrome – Google’s proprietary browser. Yup, the same browser that the EU is fining Google over!

The problem for the EU is that its meddling in the tech market tends to serve only other big tech vendors which it then must deal with later. The Microsoft case shows how the EU’s actions did not benefit the little guy but another really big guy. Just as going after Android could in time benefit Apple or Microsoft.

Does the EU get tech?

One also must question whether the EU is starting to move beyond its current understanding of technology and the market. The recent proposed legislation that would have made memes illegal is perhaps a good example of this – thankfully voted down by the EU Parliament who saw how ridiculous it was.

It is a challenge for governments everywhere to legislate around technology when it is a complex area that the legislators themselves often misunderstand – see Facebook and Cambridge Analytica. That is not to say that there should not be legislation or action taken against tech firms but (if it is to benefit customers and competitors, not just EU coffers) it needs to be thoughtful and pragmatic rather than dogmatic or ideological.

The EU may feel today that it has struck a blow for the customer and the plucky little competitor. Based on previous experience, that’s not how it always tends to turn out.

 

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