Google And Its EU Woes

Google And Its EU Woes

  10:53:00    Amaechi Olisaemeka

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Photograph by Dado Ruvic — Reuters

This essay originally appeared in Data Sheet, Fortune’sdaily tech newsletter. Sign up here.

For many Android users, one of the appealing things about Google’s mobile operating system is that it is an open ecosystem—anyone can install or modify it, since it is open source, and users can run any apps they want, something they can’t do on Apple’s iOS devices. But the European Union doesn’t see it that way. To the EU, Android is a just tool that Google uses to expand its mobile and search monopolies.

Tensions between the EU and Google have been brewing for some time, but they boiled over on Wednesday, when the European antitrust regulator served the web giant with a formal complaint, saying it believes Google has “abused its dominant position by imposing restrictions on Android device manufacturers and mobile network operators.”

For an offense like that, the EU can levy penalties of up to 10% of a company’s global revenue, which in Google’s case could be as much as $7 billion. That’s a big stick.

The core of the case revolves around two complaints: 1) That Google requires manufacturers to pre-install Google Search and Google’s Chrome browser and make them the default, and also gives them financial incentives to make those services exclusive, and 2) That it prevents manufacturers from selling smartphones that run non-Google versions of Android, or penalizes them for doing so.

In many ways, the EU case against Google is similar to the U.S. antitrust case against Microsoft that was launched in 1998 and culminated in a large fine and other penalties. Much like Google, Microsoft was accused of using what’s called “tied selling” to force manufacturers to include specific pieces of software (the Internet Explorer browser, for example) with the Windows operating system.

One big difference in U.S. antitrust law is that the ultimate barometer of whether something is illegal is whether it negatively affects the consumer—for example, by raising the price of a product or service. That would make it difficult to prosecute Google for antitrust behavior, since the vast majority of its products are free. The European Union, however, doesn’t need to make that argument—it’s free to find Google’s behavior illegal regardless of what it costs.