Stroppy Google runs rings round Brussels with Android remedy

Comment Google's artful but risky response to the European Commission highlights the weakness of Brussels' strategy dealing with big Silicon Valley companies.

It's fully consistent with Google's previous response, which is to say it goes as close to the line of outright insubordination as it can without actually crossing it.

As we outlined earlier today, Google's remedy involves dropping its insistence that Android devices (at least those shipped in the EU) must include its Search app and Chrome browser, which make it billions a year in advertising revenue. However, Google would then begin charging Android manufacturers to use Gmail, Google Play, Maps, and so on (though they would remain, unsurprisingly, free to use its Search and Chrome).

Anyone who recalls Microsoft's stroppy responses when, 20 years ago, it too was bothered by competition regulators seeking it to unbundle its wares will savour this one – but more of that in a moment.

Google knows weakness when it sees it, and is effectively challenging the commission to double or quits. The weakness in Brussels' approach is that it's the very opposite of "speak softly but carry a big stick".

The commission barks loudly, but rarely follows through with anything effective. In July, it imposed a "record fine" of €4.34bn on Google, which grabbed the headlines for a day, but then invited Google to come up with its own solution. As we wrote at the time, the fine doesn't carry much threat, can be delayed for many years, and "a huge well-resourced company like Microsoft and Google can use the European bureaucracy against itself". That's just what Google has done in response to both the vertical search and Android decisions.

Google's proposed remedy to Android dominance allows it to profit from the "punishment". That's exactly how it responded to the commission's verdict that it had abused its search monopoly. A modified form of Google's remedy went into force last year – a new pay-to-play auction slot for price-comparison sites on its front page.

Yes, you can make a non-Google phone today, but the problems become apparent almost as soon as it boots: there's no location service...

But as we reported in July, having crushed the market for organic third-party comparison sites that might fill those slots, it has had to create "fake" shopping sites, or "Comparison Shopping Partners". Critics say it is bankrolling the auction with its own money, giving the illusion of competition. There's now a revenue stream where there was not one before. And so it may be if the Android remedy is accepted.

Competitive? Sure

Back in July, the commission said it wanted more competition: more app choices, more app stores, and more flavours (forks) of Android. Google's response to this was to split its Android software bundle into two: one will command a licensee fee in Europe, the other will continue to be free. One part contains the gateway to the gigantic Android ecosystem, the Play Store. Can you guess which one this belongs to, dear reader?

Play is yoked into the pay-for bundle along with YouTube, Gmail and Maps. Since you can't viably sell an Android phone outside China without a well-stocked app store, phone makers will be obliged to pay Google the licence fee.

Now here's where Microsoft's stroppy response to a court more than 20 years ago becomes relevant. The plaintiffs were alleging that bundling Internet Explorer with Microsoft Windows was an abuse of Microsoft's monopoly position in operating systems. The court asked Microsoft to demonstrate a version of Windows without IE.

We jolly well will then, Microsoft replied – and demonstrated a version of Windows... that wouldn't boot. The official corporate press release honouring this act is still online.

The problem is, as Richard Windsor explained in July, that Google has moved the valuable APIs into the proprietary part of Android, Google Mobile Services (GMS).

"The EU has failed to require Google to make the one remedy that could make a difference. This remedy is the unbundling of Google Play from the rest of the Google Ecosystem," he wrote. Around 5,000 API calls were added in one fell swoop in Android 5.0 Lollipop, for example.

This poses a huge obstacle to the creation of a viable non-Googley Android that the commission apparently craves. Yes, you can make a non-Google phone today, but the problems become apparent almost as soon as it boots: there's no location service, for example, as Google has obliged app developers and handset makers to use its own location services. An effective structural remedy would begin to untangle GMS so that an alternative infrastructure could flourish. Otherwise Google can carry on scoffing.

And if the commission objects, Google has another argument. It can say the commission is more interested in arbitrary punishment, rather than developing a market-making solution. "You complained when we made stuff free," Google will say, "now you complain when it isn't. What are we supposed to do?"

The ball is in the commission's court. ®