According to the EC’s press release, it has also “formally opened a separate antitrust investigation into Google's conduct [regarding] the mobile operating system Android. The investigation will focus on whether Google has entered into anti-competitive agreements or abused a possible dominant position in the field of operating systems, applications and services for smart mobile devices.”
These announcements have come after an
almost five
year investigation into Google’s European business practices. The EC has tried three times
to settle this matter to no avail. New EC
Competition Commissioner Margrethe Vestager, reinvigorated the investigation last year when her office requested additional information from
various Internet vendors of online services to determine if consumers have been
harmed by Google’s behavior and to figure out if Google has utilized its
dominant market position to illegally hinder competition.
The EC’s investigation
appears to have picked up momentum after The Wall Street Journal
recently obtained a confidential 2012 U.S. Federal Trade Commission (FTC) report where key staff recommended suing Google for antitrust
violations after finding real harm to consumers and innovation. While the FTC report focused on Google’s U.S.
behavior, the company most likely acted in a similar fashion in the European
Union where it controls more than 90%
of the Internet search market.
Since the EC opened its antitrust
investigation into Google, the company has paid 100s of millions of dollars in fines
and settlements due to illegal behavior. For example, in 2011 it paid a $500 million fine
for knowingly accepting illegal advertisements from Canadian pharmacies. Subsequently, it has paid multiple million
dollar fines in the United States
and in Europe for
privacy violations in connection with its Street View data collection project, the
deceptive privacy practices in Google's roll out of its Buzz social network, its
2012 privacy policy change, and the Safari hack incident.
Illegally abusing market position in
Internet search (and/or other areas) is intertwined with data collection,
usage, and privacy issues because in order to receive the most relevant search
results to a search query a search engine must be able to access and process
voluminous amounts of data very quickly.
For years, 90% to 96% of
Google’s revenue has come from advertising which means it is dependent upon being
able to obtain massive amounts of personal information at a low cost to feed
its behavioral advertising machine.
Data dominance also appears to be a growing
concern of the EC. For
example, Commissioner Vestager recently stated that she’s
studying the U.S.’s “stringent approach to dealing with personal data as a means
to payment” in its review of deals. This
appears to signal that regulators are beginning to understand that personal and
corporate data issues are intertwined with antitrust matters.
The
EC’s announcement that it has also opened up an investigation into whether
Google has entered into anti-competitive agreements and/or abused its dominant
position in regards to its Android operating system demonstrates that it wants
to ensure that consumers are not harmed and that innovation is not stifled by
illegal market activities in the growing mobile space. Last year, The Wall Street Journal and The
Information reported that Google’s confidential Android agreements have been
“increasing the number of Google apps that must be pre-installed on [each
Android] device to as many as 20, placing more Google apps on the home screen
or in a prominent icon folder and making Google Search more prominent.”
Google’s
Android contract requirements are very troubling when comparing them to Microsoft’s pre-2002 agreements
with PC vendors which “required
PC manufacturers to bundle and promote the Internet Explorer Web browser and
other software in prominent locations on the computer screen.” Therefore,
it doesn’t surprise me that the EC is investigating whether Google’s Android agreements violate antitrust law.
This enforcement action and
the announcement of another investigation into Google’s other market activities demonstrates
the need for users of its services to carefully read their contracts with Google and
be familiar with their terms of service and troubling world-wide privacy
policy. Google's terms and privacy policy allows for unfettered data mining and profiling of consumer,
education, corporate, and government data. Multiple European Data Protection Authorities have already fined Google for its privacy practices and
ordered Google to change it privacy policy; unfortunately that has had virtually
no effect on its market behavior.
Today’s European Commission
announcement is the first step in what may be a long drawn out legal process,
which in theory could lead to a fine up to $6.4 billion dollars
and require Google to change some of its business practices. As a long time Google user, my hope is that
Google soon begins to once again abide by its corporate motto by
not being “evil”.
Copyright 2015 by The Law Office of Bradley S. Shear, LLC All rights reserved.
