ICYMI: Policy Experts Argue The EC’s Misguided Android Fine Will Inflict Consumer Harm
In response to Wednesday’s wrong-headed Android fine, more voices picked apart the flaws in EU Commissioner Margrethe Vestager’s arguments. Vestager’s decision was “protectionism masquerading as consumerism,” per AEI’s Jim Pethokoukis. Democratic Senator Ron Wyden argued, “the EC’s attack on Google is another strike against its credibility as a regulator.” The Bloomberg editorial board summarized it as a penalty that “will solve no problems and create plenty of harm.”
Key comments are below. See initial reactions here.
Consumers and developers will be harmed by the EC’s decision.
The Bloomberg editorial board argued developers and consumers alike have benefited from Google’s free and open-source software. “Android may be a dominant operating system. But because it’s free and open-source, it has vastly expanded the range of choices otherwise available to consumers. Developers around the world have built products using Android — including many of the 1.6 million Europeans who make apps for a living — and often offer them free of charge.” (Editorial Board, “Europe Misfires On Google,” Bloomberg, 7/19/18)
They also believe the EC decision will likely harm consumers by increasing costs, reducing innovation, and decreasing consumer choices. “Manufacturers get a free operating system; consumers get cheap phones and free apps, and Google gets the resulting data and advertising dollars. If the EC throws a wrench into this cycle by making it harder for Google to serve ads, the likely result is that it will start charging for Android — thus leading to more expensive phones, reduced innovation and less choice for consumers.” (Editorial Board, “Europe Misfires On Google,” Bloomberg, 7/19/18)
Technology Policy Institute’s Thomas Lenard argues the EC decision could lead to forked versions of Android (alternative versions of the operating system unapproved by Google), inhibiting consumer usability. “However, there is no reason to expect forked versions to run Google’s apps properly. So the choice is to allow manufacturers of forked versions to preinstall Google apps that may not function, or to allow preinstalled apps only when the manufacturer can guarantee they will work. Ignoring this pro-consumer and efficiency-enhancing practice does not fit any reasonable theory of anticompetitive behavior.” (Thomas M. Lenard, “Europe Strikes Again,” Technology Policy Institute, 7/20/2018)
The EC decision speaks more to the inefficacy and lack of credibility behind Commission investigations than it does Google’s actions.
Senator Ron Wyden (D-Oregon) argued, “The EC’s attack on Google is another strike against its credibility as a regulator.” (Cristiano Lima, “Tech Quiet On Trump’s EU Barb,” Politico, 7/20/18)
Daniel Schneider, Executive Director of the American Conservative Union, wrote, “The EU is not our foe, but they sure do stupid things a lot. Like its latest mercantilist action against Google.” (Daniel Schneider, Twitter, 7/19/18)
The EC decision was based on faulty economic logic.
AEI’s Jim Pethokoukis argued the EU’s case ignored the fact that tens of billions of apps are downloaded by consumers each year. “To accept the EU’s case, however, one has to ignore the reality of the modern internet, where users easily and frequently download millions of apps some 100 billion times a year. Indeed, even though developers must preload Search, Chrome, and some other Google services as a condition of licensing the app store, the arrangement is not exclusive. A device maker could also preload rival app stores and other apps.” (Jim Pethokoukis, “Europe’s Idiotic War On Google,” The Week, 7/19/18)
American Action Forum President Doug Holtz-Eakin argues that by excluding Apple from its inquiry, the EC was able to paint Android with a market share it simply doesn’t have. “An Apple phone comes with the Apple iOS operating system. Manufacturers of other phones have a choice as to which operating system to install on the phone. But because phone purchases are ‘independent from the mobile operating system,’ the EC treats handsets and operating systems as separate markets and excludes Apple from the analysis. In effect, the EC charged Google with dominating the market for mobile search on the Android. It never stood a chance.” (Douglas Holtz-Eakin, “The EC Fines Google,” American Action Forum, 7/19/18)
The EC decision is a reminder that policymakers and regulators should be cautious of over-using antitrust tools and steering market outcomes.
U.S. Chamber’s Sean Heather finds five things European antitrust gets wrong, including using antitrust to “steer market outcomes,” not “restore market forces.” “Antitrust enforcement should be grounded in the belief that markets can and should self-regulate. Further, when a private sector restraint of trade occurs, antitrust enforcement steps in to restore market forces to once again self-regulate in the market. However, Europe instead uses antitrust to steer market outcomes, something that is better left to regulation outside the sphere of antitrust.” (Sean Heather, “Five Things European Antitrust Gets Wrong,” U.S. Chamber Of Commerce, 7/20)
Jim Pethokoukis cautions overzealous regulators that the tech sector exhibits “sharp competition” and is “where fast productivity growth can be found” in our economy. “Lawmakers and regulatory agencies should be careful. Big Tech is where the fast productivity growth can be found in the U.S. economy right now. And rather than stagnant monopolies, they are in sharp competition with each other across a variety of businesses.” (Jim Pethokoukis, “Europe’s Idiotic War On Google,” The Week, 7/19/18)