Android case widens transatlantic rift

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LONDON — Even before the ink could dry on Europe’s record €4.3 billion ($5 billion) antitrust fine against Google, clashing interpretations rushed into the Brussels-created fray.

The financial penalty would change everything for Google and Silicon Valley’s other tech giants — it was a European attack on a “great” American company, according to a tweet from U.S. President Donald Trump. Or it would change nothing.

As usual, the reality is somewhere in between.

What’s clear is that Margrethe Vestager, Europe’s competition chief, is riding a wave of  public anger against tech companies that have embedded themselves in people’s digital lives, often dictating how many spend vast amounts of their time (and money) each day.

By hammering Google a second time in just over a year (the Danish politician slapped the company with a separate €2.4 billion — $2.7 billion — antitrust penalty in 2017), Europe’s competition commissioner, and her latest blockbuster fine, ratchets up pressure on Big Tech, as well as giving regulatory cover for others — notably in the United States — to potentially follow suit.

But the €4.3 billion question is whether Europe’s antitrust ruling on Wednesday will change how people use their smartphones.

And, in short, the answer is no.

Google may have abused its dominance (the search giant denies wrongdoing and is appealing both antitrust cases to Europe’s highest court). But almost all of the 2 billion people who use Android devices globally don’t see a problem with having Google Search or the company’s browser front and center when they power up their mobile devices.

And changing consumer behavior will take more than a hefty financial levy, particularly when Google’s Android ecosystem remains wildly popular. The search giant’s own digital services like maps and email, for instance, hold six out of the top 10 spots of the most widely available apps in Europe’s main markets, according to comScore, a data provider.

“The Commission is shutting the stable door after the horse has bolted,” said Geoff Blaber, a mobile analyst at CCS Insight, a technology research firm. “There is no clear alternative to Android.”

Focus on the remedies

As part of its antitrust ruling, Brussels accused Google of unfairly using Android to maintain its dominance in online search.

Vestager centered her attention on complex agreements between the search giant and phonemakers that forced them to pre-install Google Search and its browser if these manufacturers wanted to access the tech company’s popular app stores. That allowed Google to gain an unfair advantage over rivals and potentially hampers consumer choice, according to the EU’s statement.

“It’s very serious illegal behavior,” she told reporters. “It’s a very serious infringement.”

Sundar Pichai, Google’s chief executive, vigorously denied the charges, and the company will now have 90 days to figure out how to comply with Brussels’ orders.

That’s where the rubber will meet the road.

If Europe’s ruling creates breathing room between phonemakers like Samsung and Huawei and Google’s digital empire, then that could create an opportunity for others to step in. Companies like DailyMotion, a French alternative to YouTube, or Microsoft’s Bing search engine could pen deals with device manufacturers to be placed, as default options, on people’s smartphones.

And while these services may not be as popular compared with Google’s alternatives, the mere fact that they could come pre-installed on mobile devices might be enough to help them win market share away from the search giant. Only 1 percent of people currently download a competing search app for their Android phones, while a mere 10 percent of users change their web browser, according to EU figures.

In truth, most people are lazy, and if a digital service comes as a default, they are unlikely to change it (unless the offering is woefully inept).

“The real issue is the remedy,” said Harry First, co-director of the competition, innovation, and information law program at New York University. “It’s a question over whether they will be forced to open Android up, or not.”

Where’s the harm?

Google’s defenders balk at these claims, suggesting that it’s not the search giant’s fault that people prefer its digital services over those of rivals. (What they don’t mention: Google’s products, particularly online search, benefit massively from the reams of data the company routinely gathers on its users that are not available to competitors.)

The real test will come — likely by the end of 2018 — when people are given a choice to either stay within Google’s digital ecosystem or move elsewhere. Europe’s decision will only apply with the European Economic Area (the EU’s 28 countries plus Iceland, Liechtenstein and Norway), and Google will likely fight tooth and nail to make sure the antitrust ruling doesn’t extend elsewhere.

For the tech giant’s critics, Vestager’s €4.3 billion fine will open up the mobile world to greater competition and — more importantly — strengthen the backbones of other policymakers worldwide in their efforts to rein in Big Tech.

But despite Brussels’ tough talk against the misdeeds of Silicon Valley, its latest fine is unlikely to topple Google as one of the largest gorillas in the digital jungle, at least not until users believe they can get better services elsewhere.

For now, Europe has fired a warning shot across the bow of Big Tech. The true test will be if Vestager’s actions change peoples’ online habits.

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