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About one year ago, I was here to announce the opening of an antitrust investigation into some of Google's businesses practices relating to the Android operating system and Google applications running on Android. The preliminary conclusion from our investigation is that these practices breach EU antitrust rules. Today, the Commission has therefore sent a Statement of Objections to Google outlining its charges and giving Google the opportunity to reply to our concerns.
We found that Google pursues an overall strategy on mobile devices to protect and expand its dominant position in internet search. It does so by imposing unjustified restrictions and conditions on manufacturers of devices running its Android mobile operating system as well as on mobile network operators. The impact of Google’s practices is highly relevant for today’s users, as over half of internet traffic takes place on mobile devices – and this share is growing.
Smartphones and tablets play a key role in our lives. Every day we use them to read the news, shop online and check the weather forecast. About 80% of those devices in Europe and the world run on Android. This number is even higher for smartphones and tablets in the lower price range, which the majority of European consumers buy.
Google decided to develop Android as an open source operating system. This means that anybody may use the Android open source code, and potentially further develop it to create a modified operating system. The open source model is of course not the source of our competition concerns – on the contrary. But not all of Google’s business practices concerning Android and mobile search are as open or fair.
So, what are the practices that worry us?
Google has shares of over 90% in Europe in the markets for general internet search services, licensable smart mobile operating systems and app stores for the Android operating system. This is, as such, not a problem under EU competition law. However, dominant companies have a responsibility not to abuse their powerful market position by restricting competition.
Our preliminary view is that Google has abused its dominant positions in these three markets. Its strategy to protect and strengthen its dominance in general internet search has two main elements: First, the practices mean that Google Search is pre-installed and set as the default, or exclusive, search service on most Android devices sold in Europe. Second, the practices close off ways for rival search engines to access the market, via competing mobile browsers and operating systems.
This is being achieved through restrictive licensing practices. A majority of smartphone and tablet manufacturers use Android in combination with Google's proprietary apps and services, such as Google Search, Google Play Store and Google Chrome. To be able to pre-install these applications and services on their devices, manufacturers need to obtain a licence from Google. Google grants these licences only under certain restrictive conditions:
First, Google obliges manufacturers who wish to pre-install Google's Play Store on their devices to also pre-install Google Search, and set it as the default search provider on those devices. In addition, manufacturers who wish to pre-install Google's Play Store or Search, also have to pre-install Google's Chrome browser. In short, these smartphone and tablet manufacturers are not free to choose which search engines and which browsers to install on their devices. We believe that this hampers competing search and browser providers in effectively competing with Google.
Second, Google prevents manufacturers who wish to pre-install Google apps on even one of their devices from using modified, competing versions of Android on any of their other devices. As I already mentioned, Android has been developed as open source, which makes it possible for everyone to use the source code and modify it to create so-called “Android forks”. We have found evidence that due to Google's behaviour, some manufacturers have decided not to use an alternative version of Android that had been developed by a credible competitor. We have concerns that this hampers the development of rival versions of Android, which could develop into credible platforms for competing apps and services.
Third, Google provides financial incentives to manufacturers and mobile network operators on condition that Google Search is pre-installed as the exclusive search provider on their devices. We have found evidence that as a result, device manufacturers and mobile network operators have refrained from pre-installing alternative search services.
The effects of Google's strategy are not limited to internet search. Based on our investigation, the Commission is concerned that Google's behaviour has harmed consumers by stifling competition and restricting innovation also in the wider mobile space. Today's Statement of Objections finds that, as a result of Google's behaviour, rival search engines, mobile operating systems and web browsers have not been able to compete on their merits, but have rather been artificially excluded from certain business opportunities. This is worrying. It is one of my priorities to allow consumers to enjoy a wide range of innovative platforms, products and services online.
This is as you know not the only Commission antitrust investigation into Google. When I was here a year ago, I also told you that we had sent a Statement of Objections to Google on the company's favourable treatment of its comparison shopping services. This is a separate ongoing case.
Since then, Google has submitted a detailed response to these allegations. We are currently in the process of analysing the large amount of data received. We are working on this as a matter of priority, but we can of course not sacrifice quality over speed. And, we also continue to look at Google's behaviour regarding other specialised search services as well as concerns relating to the copying of third party content and advertising.
If the Commission comes to the conclusion that EU antitrust rules have been breached, companies have to change the way they do business and may face fines. This is necessary to effectively protect European consumers but, of course, also means that the rights of defence of the company concerned must be fully respected.
As regards the Google Android case, the Commission has now set out its preliminary findings in today's Statement of Objections. To be clear, this is an interim step and not the end of the road - Google now has 12 weeks to respond, and it also has the possibility to request an oral hearing to present its views. I will carefully consider Google's arguments before deciding how to proceed.