What They Are Saying: Roundup Of Criticism Related To EC Fine Against Android
Since the European Commission’s decision to fine Android, policymakers, experts, and columnists from both sides of the aisle, along with the entire ecosystem of the mobile economy, have sounded the alarm over the EC’s decision. They have warned:
—Consumers will be harmed by the EC’s decision;
—The EC’s decision ignored the fact that Android competes with Apple’s iOS, among other platforms and operating systems;
—The EC decision speaks more to the inefficacy and lack of credibility behind Commission investigations than it does Google’s actions, and is a reminder to be cautious of over-using antitrust tools;
—Experts and industry warned the decision threatens Android’s open, free, and non-exclusive model; and
—The EC is using antitrust law as a cudgel against American technology companies to hamper their growth.
Criticism Of The European Commission Fine Against Android Has Been Bipartisan
—Senator Ron Wyden (D-Oregon): “The EC’s attack on Google is another strike against its credibility as a regulator.”
—Senator Orrin Hatch (R-Utah): “The EU has a history of engaging in regulatory, tax & competition actions & proposals that disproportionately hit U.S. tech companies. This decision calls into question whether these actions are anything more than a series of discriminatory revenue grabs.”
—Senator Mike Lee (R-Utah): “Today’s decision by the European Commission to fine Google over $5 billion and require significant changes to its business model to satisfy EC bureaucrats has the potential to undermine competition and innovation in the United States. Moreover, the decision further demonstrates the different approaches to competition policy between U.S. and EC antitrust enforcers. … U.S. antitrust agencies analyze business practices based on the consumer welfare standard. This analytical framework seeks to protect consumers rather than competitors. A competitive marketplace requires strong antitrust enforcement. However, appropriate competition policy should serve the interests of consumers and not be used as a vehicle by competitors to punish their successful rivals.
FTC Commissioner Joseph Simons Argues The EC Decision Does Not Reflect The U.S. Antitrust Regime, Which “Requires There Be A Harm To Consumer Welfare.”
—FTC Commissioner Joseph Simons: “‘Once [the EU] find that a company is dominant, as I understand it, that imposes on the company kind of a fairness obligation, irrespective of what the effect on the consumer,’ he said. ‘Our antitrust regime requires that there be a harm to consumer welfare, to the consumer. So the two tests are a little bit different.’”
Consumers Will Be Harmed By The EC’s Decision
—New America’s Dipayan Ghosh: “Yet though the European Commission’s strategy may be aimed at protecting the individual consumer in the face of a major market player, the Google decision may actually set off a chain reaction that will result in higher prices for smartphone consumers in the medium term. And this unintended consequence reveals a particular problem with the EU’s regulatory approach.”
—The Wall Street Journal’s Holman Jenkins: “Only on one group would there be any immediate effect, and it would be bad: The up-and-coming poor person in some less-developed country landing his first smartphone, which will likely be cheap, and likely be running the Android operating system. One hopes a considerate salesperson or knowledgeable friend will be handy to show him how to make his purchase useful by downloading the most stable, tested and invaluable (though free to the user) apps that the rest of the world is using, made by Google. The sole practical consequence of the EU’s action would be to raise an obstacle to this person’s discovery of the opportunities created by access to the world through the mobile internet. Nice work. The EU’s celebrated competition commissioner, Denmark’s Margrethe Vestager, has not made the world a better place; she has made it kludgier.”
—FreedomWorks’ Wayne Brough: “Perhaps the magnitude of the fine was alarming, but the EC’s action is just the latest in its fusillade against American tech companies that thrive by providing consumers the products they want. Despite the aggressive actions against Google, there is scant evidence of consumer harm. To the contrary, smartphones have become ubiquitous, and provide consumers a wide range of choices when it comes to the apps they use, including search engines.”
—Competitive Enterprise Institute’s Iain Murray: “There is so much wrong with this decision it is difficult to know where to start to critique it, but the first thing to note is that it will very likely harm consumer welfare, and is at odds with American antitrust doctrine. Worse, given the EU’s outsized influence on the world economy, it represents an attempt by the EU to become the world’s antitrust regulator — a move that the United States should oppose with every tool it can muster.”
—Progressive Policy Institute’s Michael Mandel: The Android ecosystem is “a well-functioning model that provides benefits for everyone—App Economy workers, consumers, smartphone manufacturers, app developers who have a stable environment to aim for. The European Commission’s objections to this model run the risk of hurting jobs and economic growth. Depending on the nature of the penalty that the Commission imposes, Google might need to start charging for Android, driving up phone prices and hurting the app ecosystem.”
—Google’s Sundar Pichai: “The decision ignores the fact that Android phones compete with iOS phones, something that 89 percent of respondents to the Commission’s own market survey confirmed. It also misses just how much choice Android provides to thousands of phone makers and mobile network operators who build and sell Android devices; to millions of app developers around the world who have built their businesses with Android; and billions of consumers who can now afford and use cutting-edge Android smartphones.”
—CCIA’s Jakob Kucharczyk: “Consumers have never had so much choice at the tap of a button, at competitive prices. Android has been one of the drivers behind this vibrant competition and innovation. To say that consumers are harmed because of a couple of pre-installed apps is to ignore the billions of app downloads every year.”
—Software & Information Industry Association’s Mark MacCarthy: “The history of open source and mobile operating systems shows clearly that fragmentation can sink otherwise attractive software platforms, and strong governance measures need to be taken to control this risk. Competition authorities, policymakers and courts need to be keep this lesson in mind as they develop and assess policies to promote innovation and consumer welfare.”
—Consumer Technology Association: “Today’s decision by the European Council on #androidworks case threatens innovation that’s enabling the concept of software everywhere & has ramifications far beyond a single company. This will hurt app devs, content creators, marketing firms & more.”
—App Developer Ian Rumac: “Google’s Android is the most convenient. … Breaking it up would will competition because you would have to develop different apps for so many different stores.”
—Utrecht University’s Thibault Schrepel: Vestager’s fine “is more than likely to force Google to cut its R&D investments, or, at least, to slow them down.”
—Adam Smith Institute’s Sam Dumitriu: “Allowing any smartphone maker to use Android for free rather than developing their own operating system has lowered barriers to entry and allowed competition to flourish.”
—Liege Competition and Innovation Institute’s Dick Auer: “The Commission will have struck a blow to the heart of the most competitive offering in the smartphone space. And consumers will be the biggest losers. This is not what the competition laws were intended to achieve.”
—Progressive Policy Institute’s Michael Mandel: The Android ecosystem is “a well-functioning model that provides benefits for everyone—App Economy workers, consumers, smartphone manufacturers, app developers who have a stable environment to aim for. The European Commission’s objections to this model run the risk of hurting jobs and economic growth. Depending on the nature of the penalty that the Commission imposes, Google might need to start charging for Android, driving up phone prices and hurting the app ecosystem.”
—The Bloomberg Editorial Board: “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.” They further noted, “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.”
—Technology Policy Institute’s Thomas Lenard: “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.”
—National Taxpayer Union’s Kevin Glass: “Once again the European Commission (EC) has decided to continue its reckless campaign against American businesses with its massive fine against Google, undermining the very principles of competition and innovation the EC claims it wants to protect. Without demonstrating a shred of consumer harm on which prudent antitrust actions are normally based, the EC is betraying a radical agenda that falls back on discredited bromides such as protectionism and industrial policy.”
The EC’s Decision Ignored The Fact That Android Competes With Apple’s iOS, Among Other Platforms And Operating Systems
—CCIA President & CEO Ed Black: “The European Commission missed the forest for the trees when it set the parameters of their legal investigation into Android devices — which for consumers is often a cheaper, viable competitor to iPhones. The starting point of the investigation should have been the obvious: immense mobile ecosystem competition between Google’s Android and Apple’s iOS. Instead, it unnecessarily narrowed its investigation to only one particular company which offers a flexible, competitive open-source platform. Over the last few years, Android has increased smartphone competition — with consumers benefiting from greater innovation and less expensive choices.”
—Former FTC Policy Director David Balto: “Indeed, Android is not among the dominant operating systems, unlike ’90s era Windows. There are multiple viable operating systems, including Windows (still the leader), Android, iOS, macOS and Fire OS. Android is only on 40 percent of consumer devices worldwide, and less than 20 percent in the United States. We have also seen a huge resurgence in competition from Apple, which captures 87 percent of the smartphone-industry profits. Apple’s iOS ecosystem is a key competitive constraint on the Android ecosystem and vice versa.”
—Former Clinton Administration Official David Goodfriend: “Despite the EC’s claims, Android provides considerable freedom to device makers, developers, and users. Android users can easily download competing apps and app stores, remove preloaded apps from their home screens, and change defaults. Rival developers are free to forge preloading partnerships with device makers and carriers.”
—International Center For Law & Economics’ Julian Morris: “The EC’s decision seems to disregard the history of smartphone innovation and competition and their ongoing consequences. In order to be able to offer Android for free to smartphone manufacturers, Google sought to develop unique revenue streams (because, although the software is offered for free, it turns out that software developers generally don’t work for free). The main way Google did this was by requiring manufacturers that choose to install Google Play also to install its browser (Chrome) and search tools, which generate revenue from advertising. At the same time, Google kept its platform open by permitting preloads of rivals’ apps and creating a marketplace where rivals can also reach scale.”
—FTC Commissioner Joseph Simons: Google and Apple do “compete pretty heavily against each other.”
The EC Decision Speaks More To The Inefficacy And Lack Of Credibility Behind Commission Investigations Than It Does Google’s Actions, And Is A Reminder To Be Cautious Of Over-Using Antitrust Tools
—Daniel Schneider, Executive Director of the American Conservative Union: “The EU is not our foe, but they sure do stupid things a lot. Like its latest mercantilist action against Google.”
—American Enterprise Institute’s Jim Pethokoukis: “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.”
—American Action Forum President Doug Holtz-Eakin: “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.”
—U.S. Chamber’s Sean Heather: “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.”
—AEI’s Jim Pethokoukis: “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.”
—The Hoover Institution’s Nicolas Petit: “With its $5 billion fine against Google, the European Commission (EC) just applied to the search giant an old U.S. political trick: gerrymandering; the idea that if antitrust watchdogs draw markets narrowly enough, every company can be made to look like an evil monopolist.” He further writes, “When the antitrust gerrymandering tool is used, competition policy goes awry. Regulators miss the forest of competition for the tree of monopoly. In tech, they stay blind to the jungle of competitive initiatives daily reported in sectors like mobile payments, text messaging or online ads.”
Experts And Industry Warned The Decision Threatens Android’s Open, Free, And Non-Exclusive Model
—CCIA President and CEO Ed Black: “Today’s decision punishes the most open, affordable and flexible operating system in the mobile ecosystem. Android brought more competition, innovation, and consumer choice to the market. These are precisely the things competition authorities are tasked to promote rather than jeopardize.”
—Developers Alliance’s Bruce Gustafson: “Developers are not worried about competing with Google apps on the phone. Our worry is that Android becomes exactly like [Apple’s] iOS, and at that point, it is locked down. … There will be six, seven, eight versions of these closed ecosystems, which means we have to code’ multiple apps.”
—Washington Legal Foundation’s Corbin Barthold: “There are obvious pro‑competitive reasons for Google to want its free operating system to carry its search engine and other apps. For one thing, the apps’ presence is why the operating system is free. By making money from its apps rather than from licensing fees, Google reduces the cost of smartphones. … The EU regulators think their ruling will lead to better apps. It is just as likely to lead to more licensing fees and fewer open platform.”
—ITIF’s Dan Castro: “Google’s investment in the Android mobile operating system has created enormous value for consumers, developers, and device makers. … The Commission’s ruling is a blow to innovative, open-source business models, and other companies will likely think twice before trying to develop anything other than a proprietary, closed system.”
—TechFreedom’s Berin Szoka: “Here, again, the EC has defined the market to make Google seem like a monopoly — by excluding Apple. That Google and Apple compete directly would be obvious to any teenager in even the most remote village in Transylvania. And while they might lust after the iPhone as their first smartphone, they’ll probably start with an Android, because Google’s open source model has enabled a fiercely competitive ecosystem of device manufacturers offering superb, if less sexy, products at a fraction of the cost of Apple’s ultra-premium product. Killing the business model that allows Google to keep Android open source and competitive with iOS won’t help anyone — except maybe Apple.”
—Competitive Enterprise Institute’s Clyde Wayne Crews: “Google is no monopoly, as the existence of Apple’s iPhone and other options attest.”
—Adam Smith Institute’s Sam Dumitriu: Vestager’s announcement “moved the goalposts to make Android look more monopolistic than it really is. To reach the conclusion that Android controls more than 90 per cent of the mobile operating systems market, the Commission decided to exclude Apple’s iOS.”
—R Street Institute’s Caleb Watney: “Asking OEM’s to include a folder of Google apps on the home screen was essentially their way of recouping Android development costs. The EU is now effectively requiring Google to give away Android for free.”
The EC Is Using Antitrust Law As A Cudgel Against American Technology Companies To Hamper Their Growth
—University Of Chicago Law Professor Randy Picker: “This is another exercise in platform engineering by antitrust authorities. The new decision makes a statement about acceptable entry paths for dominant firms. Google offered a new business model for operating system software and the Commission didn’t like the way it would extend Google’s dominant position in desktop search into mobile.”
—Niskanen Center’s Alec Stapp & Ryan Hagemann: “It is no coincidence that Europe, having produced very few technology superstars of its own, has chosen to fine American firms billions of dollars.”
—Georgetown University’s Larry Downes: “While the size of the fine is unprecedented, the commission’s judgment is only the latest in a series of similar but escalating punishments, restrictions, tax rulings and legislation aimed at hobbling American tech companies. Though U.S. trade representatives have largely ignored it, the European Union has been waging a one-sided Internet trade war in a failing effort to protect the E.U.’s own floundering tech industry.”