European Commission’s Google case is stuck in Windows era
Antitrust violation for tying apps to Android
Supporters of the European Commission’s case against Android, in which the commission found the tying of Chrome and other apps to Google Play to be illegal under European antitrust laws, would like us to think that it’s a modern-day Microsoft case. That is, a groundbreaking use of competition laws to install competition in high-tech markets. But in looking through Microsofttinted glasses, the commission has neglected to see the significant changes in technology markets that render its case decidedly less spectacular. The Microsoft case took place in a low-tech, dial-up world where competition easily could be blocked by incumbents. In the modern tech ecosystem, developers and users now have many increasing ways to connect that no single company can control as Microsoft did. And on Android itself, Google allows for more competition and openness than that provided by companies of the dial-up era.
Microsoft was an important case as much due to the state of the market as the conduct that harmed competition. The Microsoft case was fought during a low-point in hightech choice. The typical consumer had only one computing device — a Microsoft Windows PC — and their access to software was limited to what came with their computer and what they could pick up from their local stores. Internet speeds were slow, and downloading software was a poor option. As a result, rival software developers faced real burdens to reach consumers during this dial-up era. In fact, AOL — the most powerful internet company on the planet — spent hundreds of millions to snail mail potential customers free CD-ROMs with their software to get around these hurdles. Other developers did not have such deep pockets, and Microsoft’s 80 percent share of the operatingsystem market presented a true gateway for software distribution.
The market today has little in common with that period.
Consumers have many easy ways to discover and use new software. Many live in a multiple-device household, with access to smartphones, tablets, laptops and desktops powered with broadband download speeds and multiple choices of app stores. In a one-year period, consumers downloaded more than 94 billion apps from the Google Play store alone. And every day, more and more consumers access digital services through myriad smart-home devices, such as the tens of millions of Amazon Alexa users.
Indeed, Android is not among the dominant operating systems, unlike ’90s era Windows. There are multiple viable operating systems, including Windows (still the leader), Android, iOS, macOS and Fire OS. Android is only on 40 percent of consumer devices worldwide, and less than 20 percent in the United States. We have also seen a huge resurgence in competition from Apple, which captures 87 percent of the smartphone-industry profits. Apple’s iOS ecosystem is a key competitive constraint on the Android ecosystem and vice versa. Indeed, Apple has been aggressive in trying to persuade Android users to switch, and Apple CEO Tim Cook repeatedly claims to poach record numbers of “Android switchers.” Amazingly, the commission has defined the market to not include iOS, ignoring the competition between Apple and Android that benefits users and developers.
In addition to ignoring these market realities, the commission has ignored key differences in Android’s openness for users as compared with its rivals. While Microsoft and Apple make it difficult to change defaults, Android makes it easy. Not only is it possible to change all defaults, the option isn’t just hidden in the settings menu. The user is asked what app they would like to use for a function the first time they perform it. Android users can download non-Google app stores, from which many download and use apps that compete with preinstalled Google apps. According to a survey by the Developers Alliance, a nonprofit that represents application developers, Android consumers use an average of two to three apps to perform the 14 most common tasks on their phones, such as texting, emailing or shopping. Manufacturers and telecommunications companies can even preload competitor apps (including their own), and Facebook, Yelp and Microsoft have deals to be preloaded on many Android phones.
The commission’s case against Android is no Microsoft. Applying dial-up regulatory thinking to modern competitive ecosystems is a surefire way to keep technology stuck in the past. David Balto is a public interest antitrust attorney based in Washington, D.C. He previously served as policy director at the Federal Trade Commission, as an attorney in the Justice Department’s Antitrust Division and as a senior fellow at the Center for American Progress and the New America Foundation. David advises Google. His views are his own.