FTC Looking at Complaints Over Google’s Android Control

26 Sep 2015 | Author: | No comments yet »

F.T.C. Is Said to Investigate Claims That Google Used Android to Promote Its Products.

The U.S. is said to be pursuing an antitrust investigation into Google’s Android operating system due to concerns that Google is prioritizing its own proprietary applications — like Gmail and Google search — over others, according to reports from Bloomberg and Reuters, citing anonymous sources.

WASHINGTON — Google is back under U.S. antitrust scrutiny as officials ask whether the tech giant stifled competitors’ access to its Android mobile-operating system, said two people familiar with the matter.The Federal Trade Commission has started investigating complaints that the Internet giant unfairly uses its Android mobile operating system to bolster popular Google products like Google Search and Google Maps, according to two people involved in the inquiry.

These people, who spoke on condition of anonymity, described the investigation as being in a preliminary stage, which means it could ultimately go nowhere. Harry First, a law professor at New York University, characterized Google’s growing regulatory issues as “a minor to moderate pain in the ass” in an earlier interview with Mashable. “Defending anti-trust cases does take attention of top level management and it does cost money… FTC officials have met with technology company representatives who say Google gives priority to its own services on the Android platform, while restricting others, added the people, who asked for anonymity because the matter is confidential.

Both the FTC and Google declined to comment, the former saying that it does not comment “on an investigation or the existence of an investigation”. Google has been the target of several recent complaints, many to do with its advertising networks – a business worth an estimated $5bn according to industry analyst Brian Weiser.

While there’s no guarantee the FTC will even bring a case, much less find wrongdoing, a ruling against Google could hamper its ability to compete with Apple Inc. and Microsoft Corp. for advertising dollars. A European company called Disconnect complained to the European Commission (EC) earlier this year that its app, which isolated search functions like Google’s from Google’s trackers, had been repeatedly thrown out of Google’s app store.

Others have voiced concerns to the FTC over the company’s YouTube Kids app, which they say unfairly exposes children to targeted advertising for unhealthy food, among others. That would mean forfeiting reams of valuable data the search giant uses to target consumers and sell ads, which account for the bulk of its business. “It makes zero sense business-wise,” said James Cakmak, an analyst at Monness, Crespi, Hardt & Co. “It’s all about data, and without data, you are nothing.” Android ties several Google products, including search and maps, into one bundle, much the way Microsoft did with Windows almost two decades ago. More to the point: it has become a cornerstone for Google’s high-stakes mission to dominate smaller screens in the way it has long dominated desktops.

While manufacturers are allowed to hide Google apps and put their own forward, they can’t delete some of the Google ones, said Frank Gillett, an analyst with AT Forrester Research. By building up a popular operating system for other device manufacturers to use, and later a suite of Google-designed hardware devices, Google gave itself a powerful platform to promote its own search, email, entertainment and other services independent of the whims of Apple, Microsoft or BlackBerry.

In an investigation into anticompetitive behavior, the FTC “would have to prove that [Google’s] conduct creates or increases market power”, said Fox. “In the EU, it’s a level playing field argument, and a competition on the merits argument. In Europe, Microsoft was eventually forced to unbundle Internet Explorer from its operating system and then watched its share of the browser market plummet to 22 percent from 54 percent in the space of about four-and-a-half years, according to data compiled by StatCounter GlobalStats. You have to go further and prove that prices will go up and that less will be produced.” With relationship to advertising, Fox said, those arguments are abstract and hard to make. Meanwhile, the European Union is moving forward with its own antitrust case against Google, which, in addition to questing Google’s Android practices, alleges that the company stifled competition in the online shopping market.

The FTC investigated Microsoft in 1993 over misuse of its market share through product bundling; that investigation closed but the Department of Justice then sued the company in 1998 over the same concerns, specifically its promotion of its own Internet Explorer over Netscape Navigator. One might involve rewriting contracts with manufacturers to remove language that requires the bundling of services. “One natural response would be to remove the offending provision from the contract and tell everyone ‘we had these rules and we’re taking it out because we thought about it and thought it was a bad idea,”’ said Edelman, who has worked for Microsoft. In 1998, the U.S. claimed Microsoft unlawfully protected its Windows monopoly by keeping computer makers from promoting Web browsers that competed with its Internet Explorer.

More recently, the FTC voted 5-0 in early 2013 to cease investigating the company (citing lack of evidence), but not until Google had agreed to change business practices including restricting access to advertising platforms that compete with the company’s own. Another possibility: give phone and tablet buyers more choice — letting them download the apps they want when they first buy the phone and delete the ones they don’t. The regulatory probes could hinder Google’s efforts to improve the consistency of the software that runs on multiple devices made by multiple manufacturers. If consumers can go to other manufacturers to avoid the bundled product, there’s likely no antitrust violation, First said. “The question for Android is do they really have sufficient market power, particularly in a world where there are other mobile-phone operating systems?” he said.

For years, developers have complained that making applications for different hardware, all with different size screens and processors, is much harder than developing apps for Apple’s more orderly universe of iPhones and iPads. “I have no doubt these things are being discussed in Googleplex hallways,” said Al Hilwa, an IDC analyst. “This is just an ongoing issue for Google.” After the document went public, Google lobbied the FTC to mount a more spirited defense of its decision to drop the case, according to an e-mail posted on the FTC’s website.

Two days later, FTC Chairwoman Edith Ramirez and two commissioners defended the decision to close the investigation, saying it had been in accord with recommendations from staff in the competition and economics bureaus. It has accused Google, Amazon.com Inc. and Apple Inc. of wrongly billing consumers for unauthorized purchases made by children on mobile applications. They are also examining whether handset makers are blocked from developing their own versions of Android, adding to Google’s worries in a region that makes up one-third of its revenue. If the commission moves ahead with the case, it would have to lay out its main concerns in a so-called statement of objections, which gives the company an opportunity to respond.

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