The FTC may investigate Google Android for antitrust abuses

26 Sep 2015 | Author: | No comments yet »

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

Google may soon have another lawsuit on its hands. 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… The FTC’s examination of Android-related issues is in its early stages, and it isn’t clear the commission will allocate significant resources to mount a detailed probe. 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.

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. The FTC’s handling of the earlier probe left some technology companies skeptical of the agency’s willingness to bring a case, according to the people. 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. 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.

But to get access to Google’s Play app store and other services that enhance Android phones, they have to agree to put Google’s search service prominently on the devices. Hiroshi Lockheimer, head of Android, defended its arrangements with smartphone makers in a blog in April, after European officials launched their own investigation. 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. Lockheimer said Google’s agreements with manufacturers ensured that Android phones would work well when people first bought them, by getting basic services like email and maps preinstalled and functioning harmoniously.

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. Lockheimer also said that even smartphone makers who use Google’s licensed version of Android are allowed to preload, in prominent positions, apps and services from Google rivals like Facebook Inc. and Microsoft Corp. The Android mobile platform ties together several Google products, including search and maps, into one bundle, echoing the even more dominant Microsoft Windows platforms of nearly two decades ago.

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. But FairSearch, a coalition of large technology companies that includes Google rival Microsoft Corp., said Google has misused its position and welcomed the FTC’s interest in Android. “Google has used a range of anticompetitive tactics, carrying on a troubling pattern of conduct that has made it more difficult and expensive for fresh, innovative companies to reach the market,” the group, which has long been critical of Google, said in a statement. 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.

But in what they termed “a close call,“ the staffers recommended against a broad lawsuit, citing legal hurdles and Google’s “strong procompetitive justifications” for its actions. 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.

FTC competition officials in the previous investigation recommended challenging three Google practices, including its alleged “scraping” of content from rival websites. They say they have been hampered in their attempts to get prominent positioning on Android phones or to win the status of a preinstalled, default app for their products. 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, 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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