The Record Fine: Google and Android

The fine is the record, and the record is the number: the 4.34 billion euros that the European Commission imposed on Google, the 5 billion dollars in round numbers, the penalty that was announced on July 18, the largest antitrust fine that the European Union has ever issued, the ruling that came after the three year investigation, the decision that was years in the writing. The fine is the July 2018 story: the Android system that runs on 80 percent of the world's smartphones, the practices that were investigated for three years, the ruling that found the abuse, the appeal that Google promised on the same day. The record fine is the summer story, and the story is the lesson: the platform that controls the distribution, the defaults that decide the winners, the power that the regulators are now measuring.

The record fine is the subject of this article: what Google did, why the Commission called it abuse, and what the ruling teaches about platforms, defaults, and the power of the gatekeepers.

1. The Ruling

The ruling is the verdict, and the verdict is the abuse: the dominance that was found, the practices that were illegal, the markets that were defined, the conduct that tied them together, the market for the search services, the market for the app stores, the market for the licensable systems, the dominance that was found in all three. The ruling is the July 18 announcement: the statement from Margrethe Vestager, the decision that ran to the hundreds of pages, the press conference in Brussels, the summary that made the headlines.

The ruling is also the record: the 4.34 billion euros that topped the 2.42 billion from the Shopping case last year, the fines that keep growing, the penalties that are set against the revenue, the percentage of the turnover that the number represents, the message that is sent to every platform in Europe. The ruling is the lesson: the enforcement that escalates, the precedents that accumulate, the technology companies that are now in the regulator's sights.

2. The Play Store Condition

The condition is the leverage, and the leverage is the store: the Play Store that every Android phone needs, the apps that every user expects, the manufacturers that cannot ship without it, the license that came with the strings, the manufacturers from Samsung to Sony who signed the agreements, the phones that shipped with the Google apps in the box. The strings were the practices: the Google Search that had to be pre-installed, the Chrome browser that had to be pre-installed, the condition that was attached to the store, the choice that the manufacturers did not have.

The condition is also the mechanism: the search that is the default, the default that is never changed, the users who never switch, the traffic that flows to Google, the advertising that is the money, the search bar that is never touched, the browser that is never changed, the user who never looks at the settings. The condition is the lesson: the distribution that is the moat, the defaults that are the strategy, the tying that the Commission called illegal.

3. The Payments

The payments are the inducement, and the inducement is the exclusivity: the revenue shares that Google paid, the manufacturers that were paid to keep the rivals off the screens, the carriers that were paid for the exclusive deals, the contracts that were written to buy the access, the percentages of the revenue that were shared, the deals that were struck with the biggest makers, the loyalty that was bought for the years. The payments are the July 2018 finding: the revenue sharing that Samsung received, the deals that HTC signed, the contracts that the Commission read, the exclusivity that was bought and paid for.

The payments are also the strategy: the rivals that could not buy the access, the search engines that could not reach the users, the competition that was priced out of the market, the small engines that could not pay, the challengers that could not reach the shelf, the market that was closed at the top. The payments are the lesson: the access that is sold, the defaults that are bought, the market that money controls. The payments were the inducement, and the inducement was the exclusivity.

4. The Forked Android

The fork is the threat, and the threat is the block: the Android that is open source, the versions that anyone can modify, the forks that Amazon built with the Fire OS, the manufacturers that were stopped from shipping them, the Amazon Fire that was the proof, the forks that were built and the phones that never came, the developers who waited. The block was the practice: the agreements that prevented the forked devices, the manufacturers that were told to choose, the phones that could not be sold, the competition that was closed off.

The fork is also the irony: the system that is called open, the license that is free, the control that is exercised through the agreements, the openness that lives in the code and not in the market, the code that is open and the market that is closed, the license that is free and the access that is not. The fork is the lesson: the open source that is not open distribution, the control that hides behind the free, the constraints that the Commission documented. The fork was the threat, and the threat was the block.

5. The 90 Days

The days are the deadline, and the deadline is the change: the 90 days that Google has to end the practices, the remedies that must be designed, the compliance that will be monitored, the penalties that will follow if the change does not come, the remedies that Vestager outlined, the options that Google must consider, the monitoring that the Commission will keep. The days are the July 2018 clock: the lawyers who are already working, the appeal that is being prepared, the agreements that must be rewritten, the summer that will be spent on the remedies.

The days are also the test: the auctions that may replace the exclusivity, the choice screens that may replace the defaults, the designs that must be shown to the Commission, the 90 days that will shape the market, the choice that the users may finally see, the screens that may change in the autumn, the defaults that may be undone. The days are the lesson: the deadlines that force the design, the compliance that is a product decision, the clock that is now running. The 90 days were the deadline, and the deadline was the change.

6. The Appeal

The appeal is the response, and the response is the fight: the announcement that came on the same day, the blog post from Sundar Pichai that defended Android, the arguments that will be made in Luxembourg, the years that the process will take, the appeal that will be heard by the General Court, the judges who will read the decision, the ruling that will come in the years. The appeal is the July 2018 reality: the fine that must be paid while the case runs, the interest that accrues, the ruling that stands, the process that is only beginning.

The appeal is also the pattern: the Shopping case that was appealed and the fine that was paid, the rulings that are challenged and the payments that are made, the strategy that is legal and the strategy that is public, the Microsoft cases that set the pattern, the fines that mounted while the appeals ran, the decades that the process can take. The appeal is the lesson: the fine that is paid either way, the ruling that is the start of the fight, the process that runs for years. The appeal was the response, and the response was the fight.

7. The 80 Percent

The share is the context, and the context is the scale: the 80 percent of the world's smartphones that run Android, the 2 billion devices that Google counts, the phones from Samsung and Huawei and Xiaomi, the market that the ruling covers, the phones that are sold from the flagship to the budget, the markets from the rich to the poor, the reach that no other system matches. The share is the July 2018 meaning: the default that touches most of the world, the choice that is made in Mountain View, the power that the Commission is now constraining.

The share is also the responsibility: the reach that brings the rules, the scale that attracts the scrutiny, the standard that the ruling sets for the platform, the message that other platforms will read, the developers who build for the platform, the users who cannot leave, the responsibility that comes with the scale. The share is the lesson: the dominance that is measured, the market that is defined, the 80 percent that is the target. The share was the context, and the context was the scale.

8. The Lesson

The final reframe is the lesson, and the lesson is the platform: the gatekeepers that control the access, the defaults that shape the behavior, the tying that is invisible and powerful, the power that the regulators are now measuring, the app stores that are next, the marketplaces that are being examined, the questions that are being asked about the power. The lesson is the July 2018 meaning: the fine that is a number and a signal, the ruling that is about the search and the browser and the store, the business model that is on trial.

The lesson is also the future: the other cases that are coming, the other platforms that are watching, the regulators that are emboldened, the rules that are being written for the digital economy, the companies that will change the defaults before they are forced, the platforms that will study the ruling, the lawyers who will read the fine print. The record fine is the 2018 story, and the story is the lesson: the platform that must answer for the defaults, the distribution that is the power, the 4.34 billion that is the price. The appeal will come, and the scrutiny will stay.

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