Blacklisted Rivals Win EU Crackdown

Commentary, News

An attendee checks his mobile phone while waiting in line prior the start of the Google I/O Annual Developers Conference in San Francisco, California, U.S., on Thursday, May 28, 2014. Google Inc. executives are taking the stage this week to talk about a plethora of new technologies, including automobiles, home automation, digital TV, Web-connected devices and a new version of Android. Photographer: Michael Short/Bloomberg

  • Contents of antitrust complaints date as far back as 2013
  • Complainants detail struggle retaining software businesses

Paulo Trezentos, a European technology entrepreneur, was facing a backlash from his customers. His product, a direct alternative to Google’s Play store, is prohibited from being distributed through Google’s official channels, and thus has to be installed by his customers manually. But as many as 85 percent of them were telling him Google had made doing so too difficult, “versus 15 percent about five years ago,” he says. The situation led him to file a formal complaint to European Union antitrust regulators in 2014.

A year later, Casey Oppenheim, co-founder and chief executive officer of San Francisco software startup Disconnect, came to make the same decision. The Disconnect privacy tool was banned from Google’s platform for blocking “third party and mobile applications from serving ads that Google and others sell,” according to the official complaint, forcing Disconnect’s software partners to back out from integrating the company’s services, Oppenheim says. In order to use his company’s product, potential customers must choose to ignore multiple warnings displayed on their device’s screen about the security risks involved in manually installing such tools. It’s “way more clicks than downloading through the Play Store,” he says, and the install process is “basically scaring them off.” He filed his complaint in June 2015 after Google “abruptly” removed the Disconnect app from its platform.

The debate relates to the wider issue of prime phone real-estate: The apps and services that consumers see first when they turn their phone on are the ones they’re most likely to use. The more complicated it is for them to install other apps, the harder it is for alternative application developers to grab a large number of users, clicks, and to sell extra services. “It’s obvious that if you’re a developer you have no alternative to the Google Play store — it’s the only viable access point for apps for Android,” Oppenheim said.

On Wednesday the requests for Europe’s competition regulator to step in bore fruit. Margrethe Vestager, the EU’s antitrust chief, sent Alphabet Inc., Google’s parent company, a formal statement listing regulators’ concerns with the company’s behavior, accusing it of striking restrictive contracts that prevent makers of tablets and phones from adding competing apps and web browsers.

Regular Discussions

Aptoide and Disconnect’s legal counsels have communicated regularly with officials working for Vestager in the time since filing their complaints. In October of 2015, Trezentos received a questionnaire that asked for details about Aptoide’s application and what a solution might look like. Two to three “back-and-forth” communications took place after that to clarify details, Trezentos said in an interview.

The commission has been questioning a vast array of companies from application developers to telecommunications carriers and mobile manufacturers since 2013, to map out Google’s influence over the mobile market, through applications, services and the phones themselves. Companies such as handset makers that rely on and fear Google didn’t always want to respond to the EU. Some requests for information were issued with a legal order requiring them to answer, one person involved in the case said.

Disconnect, like Aptoide, is hoping the commission’s investigation will help sway Google into allowing its app into in the official marketplace, and tweaking Android to make it easier for customers to install any software not hosted there.

Google declined to comment, referring to a blog post from last year where it said rival apps are often pre-loaded onto phones alongside its own apps. In a statementWednesday it said its “business model keeps manufacturers’ costs low and their flexibility high,” and offers customers “unprecedented control of their mobile devices.”

Bigger Names

It’s not just individual companies that have been pushing for action. A larger group has been applying pressure onto regulators for action in Europe since 2013. Fairsearch — a group representing Nokia Oyj and Oracle Corp., among numerous other companies — turned to allies in Brussels to complain that Google’s mobile-phone software is too self-serving.

One of the EU’s resulting concerns: Google’s limits on partners from tailoring the Android operating system for their own phones. Android is based on open-source software, distributed free of charge. But if a phone maker wants to pre-install certain Google tools on its devices, Google bars the manufacturer from selling phones that have an Android variant, also known as a “fork.”

Thomas Vinje, a lawyer and spokesman for Fairsearch, highlights a case in point. “Asus produced a fork of Android which it intended to sell in China,” he said. “After the product announcement Google threatened to cut Asus off from the proprietary version of Android, so Asus withdrew the product from the market. That is direct consumer harm.” A similar situation was reported by CNET to have occurred in 2012 between Google and Acer, regarding the canceled release of a smartphone running Chinese retail giant Alibaba’s Aliyun software.

“The world is moving towards mobile and the conduct at issue in the Android case if left unchecked would lead to Google completely dominating the mobile sphere,” said Vinje. “That would decimate competition in a whole raft of areas including advertising, mobile devices and mobile services. In fact, Google could wind up with even greater dominance in mobile services than its existing dominance in search.”

Read this article in its original format at Bloomberg.com


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