US FTC investigates Google on Android dominance over competition

26 Sep 2015 | Author: | No comments yet »

FTC Looking at Complaints Over Google’s Android Control.

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 is about to launch an investigation into whether Google unfairly used Android’s strength in the mobile computing market to prioritize its own services over those of competitors, Bloomberg reported, citing two anonymous sources. The Android mobile platform is a key element in Google’s strategy to maintain revenue from online advertising as people switch from Web browser searches to smartphone apps. 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. Department of Justice about Google’s anti-competitive practices and urged the regulator to investigate allegations that Google unfairly uses its Android system to hurt rivals.

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. In a blog post in April, a top Google executive defended the way the company handles Android, saying other firms could use Android without Google but that working with Google benefits consumers by giving them a better experience with their phone. ‘The stakes are extremely high, because Google’s behavior impacts the entire mobile ecosystem, including map and location services, and app developers,’ the group said in a statement. Regardless, it shows the FTC is again turning its attention to one of America’s biggest companies, two years after it closed a separate investigation into Google’s Internet search business. App makers offering alternatives to Google’s popular products, such as HERE for maps or Microsoft for search, would benefit if the Mountain View tech giant’s hold on Android is weakened, though a slow legal process means they likely will not see relief anytime soon, said analyst Bob O’Donnell of TECHnalysis Research. ‘If they said, as of tomorrow, ‘Google, you cannot bundle all these services,’ it would be a huge deal,’ he said. ‘But that’s not what going to happen – it’s going to drag on.’ Google previously tangled with the FTC over Web search allegations and reached a settlement in 2013 that required the company to stop ‘scraping’ reviews and other data from rival websites for its own products. 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.

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. After that settlement, the FTC was embarrassed by the inadvertent release of documents that showed key staff members argued that Google broke antitrust law. Google’s Android operating system accounted for 59 percent of the U.S. smartphone market in the second quarter, while Apple’s iPhone software had 38 percent, according to market-research firm International Data Corp.

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. To go after Google, the FTC would have to show that it has a big enough share of the market to be dominant and that they prevent rivals from being able to compete for consumers’ attention, said Andre Barlow of the law firm Doyle, Barlow and Mazard PLLC.

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. 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. 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.

The FTC previously conducted a detailed investigation of whether Google abused its dominance in Internet search, but closed that probe in early 2013 without bringing a case. 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.

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. The regulatory probes could hinder Google’s efforts to improve the consistency of the software that runs on multiple devices made by multiple manufacturers.

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. 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. The FTC declined to address the issue. “FTC investigations are nonpublic and we do not comment on an investigation or the existence of an investigation,” said spokesman Justin Cole. Separately, the European Commission, the European Union’s executive arm, also has formally charged Google with skewing its search results to favor its own shopping services.

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