Wednesday 25 July 2018

European antitrust time-warps

It’s astounding. Time seems to be repeating. European madness takes its toll.

Two decades ago, the European Commission (EC) worried that Microsoft was abusing its dominant position. Microsoft’s operating system was the way most people interacted with computers, and the operating system came bundled with a media player and an internet browser. The EC reckoned that Microsoft was exploiting its dominant position in the operating system market to lock up other markets.

And so, late in 2004, it required Microsoft to offer European versions of Windows that did not include a media player. Five years later, it required Microsoft to offer users choices among internet browsers when installing Windows so Internet Explorer would not be privileged by Windows’ dominant position.

It was always ludicrous. Installing alternative media players, or browsers, was and is trivially easy. Microsoft’s dominance was driven by its superior products. In areas where Microsoft’s products lagged, Windows’ dominance provided it with no advantage. A typo in Internet Explorer’s URL bar would lead the user to an MSN Search window, but Google provided the better search engine and users chose it despite the Commission’s contrived arguments about consumer lock-in.

Early last year, Google’s Android overtook Microsoft Windows as the most popular way of getting to the internet. The EC decided this week, in a bit of a mind flip back into the 2000s, that it should be harder for Android users to access Google services like Google search. It fined Google €4.34 billion, or just under NZD$7.5 billion.

The EC’s complaint is at least as ludicrous as its 2000s worries about Internet Explorer. It was as simple for me to install Firefox in the early 2000s on my Windows machine as it is for me to install DuckDuckGo on my Android phone today. Google’s search dominance depends on keeping ahead of its competitors.

And while the EC sees anticompetitive purpose in Google requiring that manufacturers build from its version of Android, the better explanation is that apps available in Google’s Play store might not work well on alternative versions.

New Zealand is on the sidelines of this dispute but does have a stake. Kiwi app developers may have to look forward to coding for compatibility with a bevy of Android variants. And if Google has to fund Android development through licensing fees rather than bundled search tools, we can expect higher phone prices.

I hate doing this time warp again.
Me in last week's Insights newsletter.

I like Julian Morris's take over at Truth on the Market as well:
The importance of these factors to the success of Android is acknowledged by the EC. But instead of treating them as legitimate business practices that enabled the development of high-quality, low-cost smartphones and a universe of apps that benefits billions of people, the Commission simply asserts that they are harmful, anticompetitive practices.

For example, the Commission asserts that
In order to be able to pre-install on their devices Google’s proprietary apps, including the Play Store and Google Search, manufacturers had to commit not to develop or sell even a single device running on an Android fork. The Commission found that this conduct was abusive as of 2011, which is the date Google became dominant in the market for app stores for the Android mobile operating system.
This is simply absurd, to say nothing of ahistorical. As noted, the restrictions on Android forks plays an important role in maintaining the coherency of the Android ecosystem. If device manufacturers were able to freely install Google apps (and other apps via the Play Store) on devices running problematic Android forks that were unable to run the apps properly, consumers — and app developers — would be frustrated, Google’s brand would suffer, and the value of the ecosystem would be diminished. Extending this restriction to all devices produced by a specific manufacturer, regardless of whether they come with Google apps preinstalled, reinforces the importance of the prohibition to maintaining the coherency of the ecosystem.

It is ridiculous to say that something (efforts to rein in Android forking) that made perfect sense until 2011 and that was central to the eventual success of Android suddenly becomes “abusive” precisely because of that success — particularly when the pre-2011 efforts were often viewed as insufficient and unsuccessful (a January 2012 Guardian Technology Blog post, “How Google has lost control of Android,” sums it up nicely).

Meanwhile, if Google is unable to tie pre-installation of its search and browser apps to the installation of its app store, then it will have less financial incentive to continue to maintain the Android ecosystem. Or, more likely, it will have to find other ways to generate revenue from the sale of devices in the EU — such as charging device manufacturers for Android or Google Play. The result is that consumers will be harmed, either because the ecosystem will be degraded, or because smartphones will become more expensive.

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