Last week, the European commission, that bete noire of Messrs Gove, Johnson & co, resumed its attack on Google. On Wednesday, Eurocrats filed formal charges against the company, accusing it of abusing its dominance of the Android operating system, which is currently the world’s most-used mobile operating system software. This new charge comes on top of an earlier case in which the commission accused Google of abusing its overwhelming dominance of the web-search market in Europe in order to favour its own enterprises over those of competitors.
This could be a big deal. If the commission decides that Google has indeed broken European competition law, then it can levy fines of up to 10% of the company’s annual global revenue for each of the charges. Given that Google’s global sales last year came to nearly $75bn, we’re talking about a possible fine of $15bn (£10.5bn). Even by Google standards, that’s serious money. And it’s not exactly an idle threat: in the past, the Eurocrats have taken more than a billion dollars off both Microsoft and Intel for such violations.
To those of us who follow these things, there’s a whiff of Back to the Future here. At any rate, there are distinct echoes of an earlier row (in the late 1990s) between the commission and Microsoft, which was then as dominant in the PC market as Google is now in search and mobile operating systems. PC manufacturers had to license the Windows operating system from Microsoft and those licences included onerous obligations to have certain Microsoft programs (for example the Internet Explorer browser and Microsoft media player software) installed by default on every PC sold. In 2003, Microsoft was fined heavily and forced to stop “bundling” its media player with Windows and to provide the information to competitors necessary to enable their media player programs to interact with the PC operating system.
In essence, the commission is now charging Google with an analogous offence. Android is the open source mobile operating system that it created. In principle, anyone can use it. But mobile phone manufacturers such as Samsung, HTC and others have licensed it to power their devices. The commission claims that Google is imposing licensing terms on them that favour its services.
To be allowed to pre-install the Google Play Store on a device, for example, a manufacturer must also pre-install all 11 of the programs (Gmail, YouTube, Google Search etc) in the company’s suite of apps. In the commission’s view, this is tantamount to hindering competition and abusing a dominant market share.
Google, needless to say, is not impressed. “Our partner agreements,” writes its general counsel, Kent Walker, “are entirely voluntary – anyone can use Android without Google. Try it – you can download the entire operating system for free, modify it how you want and build a phone. And major companies like Amazon do just that.” So Android is free. But the costs of developing it, fixing bugs, creating security patches and updating the system are non-trivial. Given that, says Kent, “we offset our costs through the revenue we generate on our Google apps and services we distribute via Android”. The implication is that it’s perfectly reasonable to demand that if phone manufacturers wish to use the Google app store then they should be obliged to also install the apps from which the company makes money. What’s so anti-competitive about that?
The only certainty about this case is that it will run and run, just like the earlier cases with Microsoft and Intel. The seemingly interminable legal wrangling that characterises these disputes leads some people to conclude that the whole exercise is pointless. After all, by the time the original Microsoft suit was finally resolved, the company’s monopoly position had been substantially eroded by the eclipse of the desktop PC and the rise of mobile and cloud computing.
This kind of fatalistic pessimism has to be resisted. The companies that now dominate the networked world are as powerful in their way as any of the corporate giants of the past, indeed perhaps more so because they know so much more about us than did their predecessors. And one of the few certainties in life is that whenever individuals or organisations possess untrammelled power, then they will abuse it. So they have to be challenged.
But by whom? Once upon a time, we relied on the state to do this on our behalf – to cut monopolies down to size, to keep corporate power in check. The strange thing about the digital world is that states now seem unequal to this task. At the moment, the EC is the only game in town. Which makes one wonder if the Brexit enthusiasts have thought of that.
