Yesterday, Luigi Zingales defended the EC’s fine of Google’s Android arguing the absence of similar enforcement have raised cell phone costs for consumers. Below are three issues with Zingales’ defense, but more broadly Zingales fails to mention 1) Android is free and operators were always able to pre-install competing apps and 2) the U.S. tech sector leads the globe in innovation, especially Europe, with the high majority of consumers liking and trusting technology companies.

The three specific issues with Zingales’ piece are below.

#1 Zingales lets the word “almost” do the heavy lifting in mischaracterizing the Android case’s similarity to Microsoft. Zingales says: “The latest fine was imposed for tying the Google search engine and Chrome browser to the Android operating system. This is almost identical to a  Microsoft case, completed in 2001,  in which the technology giant was charged for tying its browser to the Windows operating system. In that case, authorities in both Europe and the United States ruled against Microsoft.” (emphasis our own)

— David Balto, Former Assistant Director of Policy at the FTC, argues comparisons to Microsoft ignore that “[t]he market today has little in common with that period” and “key differences in Android’s openness for users as compared with its rivals.” “The Microsoft case took place in a low-tech, dial-up world where competition easily could be blocked by incumbents. In the modern tech ecosystem, developers and users now have many increasing ways to connect that no single company can control as Microsoft did. And on Android itself, Google allows for more competition and openness than that provided by companies of the dial-up era.”(David Balto, “European Commission’s Google Case Is Stuck In Windows Era,” San Francisco Chronicle, 7/23/18)

#2 In alleging that competition policy has raised cell phone prices in the U.S., Zingales cites a study focused on telecom carriers, not Android — conflating Android with complaints about telecom carriers. He writes, “We compared the difference in the prices of the same package of mobile phone services in the United States and Germany. Even accounting for the higher headset subsidies in the States, in 2015 Americans paid $65 billion more a year. We estimate that consumers in the United States are paying producers around $50 billion more a year than their European counterparts.”

— Google CEO Sundar Pichai notes because Android is a free OS, it’s created opportunities for 1,000+ brands to create 24,000 phones at many price points. “10 years ago, we launched the first Android phone with a simple idea to build a mobile platform that’s free and open to everyone,” said Pichai. “Today, there are more than 24,000 devices at every price point from more than 1,300 different brands.” (Jean Baptiste Su, “Google CEO To Take A Constructive Approach To Deal With Massive $5 Billion Android Fine,” Forbes, 7/24/18)

— On average an Android costs three times less than its competitors.

#3 Zingales ignores that U.S. tech leaders lead the world in R&D spending as a percentage of revenue and that U.S. R&D intensity vastly exceeds Europe’s. Zingales notes: “American firms tend to be more profitable than their European counterparts, but they do not seem to use the extra profitability to invest more.”

— A report from the European Commission places Europe significantly behind the U.S in business R&D.  “Business research and development in Europe significantly lags behind third countries. It accounts for 1.3% of Europe’s GDP, while in the US, Japan and South Korea it rises to 2%, 2.6% and 3.3% respectively.” (Beñat Bilbao-Osorio and Román Arjona, “The State Of Research And Innovation In Europe In 7 charts,” WEF, 2/21/18)

— U.S tech services lead the country in R&D spending.

(Dan Gallagher, “Big Tech’s Growth Comes With A Big Bill,” The Wall Street Journal, 7/17/18)