“Below cost” Android licensing seen as anti-competitive by competitors, EU probe underway

June 13, 2013

Android

European regulators are again looking at Google’s business in the region, this time investigating alleged anti-competitive practices related to its mobile business, namely Android.

Yes, the EU wants to know more about Google’s Android licensing deals, and whether the company used its position to impose certain condition to business partners.

While the probe is informal, it looks like the commission has sent out questionnaires to various companies that work with Google to figure out whether the allegations have any basis. The commission has issued a 23-page document containing 82 questions it wants answers to, with various device makers and mobile operators having to answer them.

It appears that several companies, including Microsoft, Nokia and Oracle have complained that Android is licensed “below cost” and that Google may have asked partners to “cancel and/or delay the launch of smartphone devices” running other mobile operating systems than Android.

The commission will also investigate whether Google signed any exclusivity deals with OEMs in order for its web services to be pre-installed on Android devices made by those OEMs.

Commenting on the matter, Google said:

Android is an open platform that fosters competition. Handset makers, carriers and consumers can decide how to use Android, including which applications they want to use.

The Financial Times tells us that the investigation into Android “has been open for more than a year,” but it took a “sharper focus” when 17 companies including the three mentioned above sent a formal complaint in April about “Google allegedly abusing its dominance” (see second Source link below).

Nexus 4

The commission has also investigated Google for its business practices – a settlement between the EU and Google has been reached – and while the two probes may overlap, these two investigations should be separate.

The FT says that Joaquin Almunia, the EU’s competition chief, “is under intense pressure” from Google’s competitors to either serve charges to Google or change the proposed settlement in the search-related matter. Therefore, it will be interesting to see where this Android investigation is heading.

In case you don’t know it by now, Android is licensed free of charge to OEMs, which is one reason that helped it grow in popularity, as pretty much anyone interested in creating a smart mobile device was able to do so by using Android.

Comparatively, Microsoft is licensing Window Phone to its partners, Nokia included, so it’s more than obvious to anyone that Google “sells” Android “below cost” because Android is, well, free of charge. However, Google has always offered Android for free to OEMs, and it’s a business decision it took for its own reasons – without going into too many details about why Google chose this path, it’s enough to remind you that Google makes its money from search and ads (mobile Internet traffic included) and needs to have a strong presence in the mobile world, which is done via Android.

Luckily for Google and unfortunately for its competitors, the OS was well received by OEMs, carriers and the public, and the decision to license it for free has paid off. It could have always worked against Google, but that didn’t happen. Should it be punished for that? Why didn’t competitors complain in a similar manner in the previous years about Android licensing? Of course, we’re only commenting on that “below cost” licensing argument, and we’re not trying to defend Google here, as the company has a legal team that will do just that. There are other allegations on the table in this investigation, which are out of our reach, so we’ll have to wait for the commission to release its findings on whether Google indeed abused its position in relationship with OEMs and carriers or not.

That said, it’s too early to draw any conclusions, or speculate on how this new EU probe into Google’s business will conclude. These sort of investigations will take a while to complete, so chances are we’re going to hear more details about it as we move along.

Comments

  • Austin

    That’s a very dangerous way to go. Next thing they will accuse Google of “selling” their web search or google translate for below cost and they might oblige Google to introduce paid subscription for these services. This is essentially forbidding companies to have creative business models and essentially banning all modern web based business models. I am sick and tired of companies and businesses (such as the music industry, for example) that cannot adapt to the new business models and only rely on court cases to keep them afloat. What a shame! This is evolution – the ones that can adapt – survive, the rest are doomed to die out…

    • On a Clear Day

      Back when Microsoft was tied up by the Justice Department in its anti-trust suit Apple as well as everyone else in the computer/tech field jumped on board and were anti-Microsoft. Apparently the more things change the more they remain the same. Google has managed to create services that have intrinsic value and which naturally cause people to want to use them and, in the process, created a business that the others are extremely envious of and would like to see done away with so they can more easily compete.

      Free enterprise is about competition and going beyond the paradigms of the past and those who can’t keep up get left behind.

  • SlenderSniper

    How much you want to bet that it’s FairSearch behind this “informal” inquiry?

  • Cao Meo

    MS, Oracle, Nokia… bunch of losers

  • nithin

    lol retard system and MS,Nokia damn scared about android and they know android has taken over them in big way and its not possible for them to succeed like before.
    so what if Google has given license “below cost”? android is Google’s product and its their wish to set costs and other things
    fk europe and fk MS,nokia and also apple :)

  • Matthew Wypyszinski

    tl;dr, companies butthurt that they cannot compete with google are complaining that google has chosen not to play the game and gone off and done their own thing, which works. more companies need to make open source software like google.

  • Rooney-

    Hmmm!! Nt good losers. Try something else!

  • 윌 스튜어트

    This is nonsense started by MS & Nokia. If anything wrong was happening it should be HTC, Samsung and other Android OEMs complaining not MS.

  • plop

    well..
    Microsoft, Nokia, & Oracle can use Android if they want, it’s free

    • On a Clear Day

      That’s funny!

  • Mike Bastable

    I think this investigation will be focusing not on the free nature of Android but google’s implied use of influence to hinder development, by the OEMs, of a broader platform base: for example google discouraging Samsung from promoting BADA (a theoretical example). To block development by others would be a serious issue with very serious consequences.
    I dont think google would be stupid enough to do that, surely the Android Business model survives on quality not hardball tactics. Ultimately the consumers have chosen to support OEMs using Android and thus more OEMs focus on Android so as to sell to consumers.
    EU probes are never good news though because they have teeth and will use them if they need to…

  • Jim

    “It appears that several companies, including Microsoft, Nokia and Oracle have complained that Android is licensed “below cost” and that Google may have asked partners to “cancel and/or delay the launch of smartphone devices” running other mobile operating systems than Android.”

    Seems funny that MS and Nokia (who’s joint venture prob should be examined by an external board) complain about google trying to gain exclusivity with OME’s.

    The other complaint on below cost, surly they can’t get into trouble for that? As those above have said you can’t outlaw it just because it’s a different model.

    I wish the competition to goggle would just stop bitching and start innovating again. If you want more costumers give the consumers a better product and the will soon follow.

  • Joseph Povinelli

    Android is great because it was built for developers, which manufactured it in a product for the user. Google made it for the developer, not to be expensive to get, but open-sourced and free. This is why Android is much different from basically all mobile operating systems today, ahead in the game. If Microsoft with its mobile OS wants to compete, they’ll have to find ways to push it out to more developers.