The European Commission Picks a Fight with Google Android over Business Models

On July 18, 2018, the European Commission announced a new €4.34 billion fine over Android and ordered Google to change how it licenses Android software. This is the second Commission fine for Google in roughly a year—the other was over Google’s comparison shopping service and that fine was €2.42 billion. You can connect those two points with a line and Google can’t like what that looks like.

This is another exercise in platform engineering by antitrust authorities. The new decision makes a statement about acceptable entry paths for dominant firms. Google offered a new business model for operating system software and the Commission didn’t like the way it would extend Google’s dominant position in desktop search into mobile. There is an element of truth there, but the Commission also appears to undervalue the virtues of business model competition, at least based on what we see from the choices that consumers actually made.

In the new Android case, the Commission found that Google had impermissibly tied its Google Play Store to the Google Search app and to its Chrome browser. Android is a mix of open-source software and proprietary software owned by Google. The Google Play store belongs to Google and the Commission concluded that it has become dominant among competing Android stores. The fact that it is dominant isn’t the issue; rather the Commission is concerned with how Google has used that dominant position. The Commission found that Google had insisted that Android handset makers pre-install the Google Search app and Chrome in order to get Google Play, and handset makers wanted Google Play. Antitrust lawyers call that tying.

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