The European Commission had solid antitrust reasons for fining Google €4.3-billion for violations including the bundling of certain apps with the Android operating system — and for not going after Apple for similar behaviour. Yet, from a consumer’s point of view, Apple should get the same kind of attention.
The most important infraction by Google in the EU ruling is the “illegal tying” of its search and browser apps to the Android operating system. The search giant, the ruling said, made Android phone manufacturers pre-install its search and browser applications if they wanted to provide access to the Google Play store, where almost all Android users get their apps. That, according to the European Commission, reduced the ability of other search providers and browser developers to compete because pre-installation creates a “status-quo bias”: users are too lazy to research alternatives to apps that are already on their new phones.
The commission ruled that the bundling practices were illegal because of Google’s dominance in the markets of “licensable smart mobile operating systems and app stores for the Android mobile operating system”. The language matters because Apple (or BlackBerry) doesn’t license its operating systems to equipment manufacturers. It produces a full package and cannot be accused of putting illegal pressure on manufacturers. It makes intuitive sense for the EU to refrain from punishing Apple, too: if a product wholly belongs to a company, it can decide what to wrap into it.
But if Google is at fault for its de facto monopoly in Android app stores, Apple should be held to account for a similar violation. Although an Android user can easily shop in a few alternative stores (though none is a match for the Google Play store), an iPhone user cannot go outside Apple’s App Store without “jail-breaking” the phone, a process that disables operating system updates. That makes Apple a monopoly in the truest sense of the word, and the US supreme court has agreed to hear a suit challenging this super-dominant position on behalf of consumers who have no choice but to pay Apple’s 30% commission for developers as part of every app’s price.
Like Google, Apple makes its pre-installed browser impossible to delete from a phone. Google, however, allows users to choose their own default applications, including the browser and maps. Apple doesn’t do that; you can, for example, install Google’s Chrome browser and Google Maps on an iPhone, but they won’t launch by default when you click on a link in an e-mail or another app. That’s even more anticompetitive than simply pre-installing one’s own software and hoping users will keep it because it’s good enough.
Indeed, Chrome’s market share on mobile devices is smaller than Android’s. Apple is more effective at keeping competitors out: its Safari browser holds almost the same market share as its iOS operating system.
Choice of apps
As a consumer, I’d like all phone makers, whether their gadgets run Android, iOS, Samsung’s Tizen, Linux or something even more exotic, to offer me a choice of apps. When setting up a new phone, users should see a list of browser apps, with ratings from users and independent reviewers, along with a list of e-mail applications and mapping and navigation apps. The lazier users could just hit a button for installing all the apps recommended by the operating system producer.
The experience of Microsoft, which was forced by the EU to give users a choice of browsers on Windows computers (it was fined twice for not doing so) shows that letting people decide for themselves creates a level playing field for competition. Chrome, and not a Microsoft-developed program, is now the most popular browser on Windows.
Independent developers are capable of producing better apps than those created by the big platform companies. They deserve a boost from a universal pre-installation ban. And the platform companies, too, can only benefit from more competition: it’ll keep them in shape as app developers.
It’s understandable that Margrethe Vestager, the EU competition commissioner, didn’t go for a complete ban on pre-installing basic apps on mobile phones. Trying to regulate giants such as Apple, Google, Facebook, Microsoft and Intel, which have all received antitrust fines from the EU in the last 10 years, requires a lot of resources. The companies fight back with all their lobbying might, and appeal every ruling against them. Vestager has to concentrate on areas where she’s on the most solid ground, and going for major behaviour changes in an entire industry probably would be too ambitious. On Wednesday, she said repeatedly that it wasn’t her business to tell Google what to do, just to punish it for illegal behaviour.
And yet there is a case to be made for regulatory interference in app pre-installation practices. European companies are unlikely to become operating system leaders in the foreseeable future. But Europe does have a sizeable app economy: in 2017, it employed 1.89 million people, compared to 1.73 million in the US. Giving this industry easier access to consumers should be a goal for European policy makers and regulators. Vestager’s latest Google ruling should be just a first step, not an isolated attack on one US company for something others do, too. — (c) 2018 Bloomberg LP
