The Objection: Europe and Google's Android

On Wednesday, the European Commission formally told Google that it believes the company abused its dominance with Android, and the statement of objections was the loudest shot yet in the transatlantic fight over the power of the platform giants. The Commission said Google had used Android, the operating system that runs on around eight out of every ten smartphones in Europe, to cement the dominance of its own search engine. The announcement is the April 2016 story, and the story is the lesson: the platform that everyone needs can become the platform that no one can challenge.

The Objection is the subject of this article: what the Commission alleged, how the practices worked, what Google said in response, and what the case means for the future of mobile competition. The statement of objections was issued on April 20, and it was the formal step that could lead to fines and forced changes. This is the story of the objection, and the story is about the moment Europe decided to test the power of the platforms.

1. The Statement

The statement of objections is the European Commission's formal way of saying it believes a company has broken the law, and the statement sent to Google was detailed and damning. The Commission said it had reached the preliminary view that Google abused its dominant position in the markets for mobile operating systems, app stores, and general search. The document ran to hundreds of pages, and the summary ran to three practices.

The timing was not accidental. The Commission had spent years investigating Google, and the Android case was the second major front: the Shopping case had produced its own statement of objections a year earlier. The announcement was made by Margrethe Vestager, the competition commissioner, and she framed the case in plain language. The statement was the beginning of a process, and the process could end in fines and remedies.

2. The Practice

The first practice the Commission attacked was the tying of Google's apps to the Play Store. According to the Commission, Google required manufacturers to pre-install Google Search and the Chrome browser as a condition for licensing the Play Store, the app store that Android devices need to function in practice. The requirement meant that every significant Android phone in Europe came with Google's search and browser pre-installed, no matter what the manufacturer or the customer wanted.

The second practice was the payments. The Commission said Google made payments to manufacturers and network operators on the condition that they exclusively pre-install Google Search on their devices. The payments were the financial version of the tying, a way to buy the default position that the tying could not reach. The third practice was the fences: the Commission said Google prevented manufacturers from selling devices that ran on forked versions of Android, versions not approved by Google. The practices were the case, and the case was the system.

3. The Dominance

The foundation of the case was dominance, and the dominance was not in dispute. Android ran on more than eighty percent of smartphones in Europe, and the numbers made the market the center of the case. The Commission's argument was that a company with that kind of reach cannot use its platform to favor its own products without hurting competition, and that the tying, the payments, and the fences all served the same purpose: protecting Google's search dominance from the rise of the mobile web.

The dominance argument was the heart of European competition law, and the heart beat strongly in the case. The Commission did not need to prove that consumers were harmed in the traditional sense, and it needed to prove that the practices could distort competition. The dominance made the practices look different: what a small company could do with impunity, a dominant platform could not. The dominance was the frame, and the frame made the case.

4. The Defense

Google's defense was prepared in advance, and the defense had two parts. The first part was that Android is free and open source, and that manufacturers can use it without paying Google a cent. The second part was that the real competition was with Apple, and that the iOS ecosystem gave consumers a powerful alternative to anything Google did. The company said the pre-installation agreements were about making the Android experience consistent, and that users could change their defaults and uninstall the apps.

The defense was not without force, and the force was the reason the case would take years. The free and open nature of Android was real, and the competition with Apple was real, and the Commission would have to explain why the practices harmed consumers who had the choice of an iPhone. The defense was the company's argument that the platform was a gift, and the argument was the counterweight to the accusation. The defense was the beginning of the fight, and the fight would be long.

5. The Remedy

The stakes of the case were the remedies, and the remedies were the reason the case mattered beyond the lawyers. If the Commission's view was confirmed, Google could be ordered to stop the practices: no more tying of Search to the Play Store, no more payments for exclusivity, no more fences around forked Android. The remedies could change the shape of the Android ecosystem in Europe, and the shape of the shape was the future of the mobile web.

The remedies were also the reason the case was watched around the world. The European Commission had become the world's most aggressive regulator of the technology industry, and its decisions in the Google cases were setting the template for other regulators. A finding against Google in the Android case would be a finding that the platform model itself could be regulated, and the finding would echo far beyond Europe. The remedies were the prize, and the prize was the precedent.

6. The Vestager

The case was personified by Margrethe Vestager, and the personification was part of the story. The Danish commissioner had built a reputation as the enforcer the technology giants could not ignore, with the Shopping case, the tax cases against Apple and others, and now the Android case. She spoke in measured, plain language, and she described the practices with a clarity that made the corporate lawyers uncomfortable.

Vestager's approach was a study in the power of patience. The cases took years, and the years were the point: the Commission could outlast the companies, and the companies had to deal with the uncertainty. She presented the Android case as a matter of consumer choice, of people having the freedom to pick their own apps, and the framing was effective. Vestager was the face of the enforcement, and the face was the message.

7. The Stakes

The stakes of the case reached beyond Google, and the stakes were about the structure of the mobile economy. The smartphone was the most important device in the world, and the operating system was the gatekeeper of the device, and the case asked who controlled the gate. The Commission's theory was that the gatekeeper could not use its position to favor itself, and the theory was a challenge to the entire platform business model.

The stakes were also about the relationship between Europe and the American technology industry. The Commission had become the regulator of last resort for the global digital economy, and its cases were the only serious checks on the power of the American platforms. The Android case was the biggest of the checks, and the biggest was the most important. The stakes were the story, and the story was about who would set the rules of the mobile world.

8. The Lesson

The lesson of the objection is about the power of defaults, and the power is easy to underestimate. The case was about pre-installed apps and default settings, the quiet details that most users never think about, and the details were worth billions. The lesson for companies is that the default position is the most valuable real estate in technology, and the lesson for regulators is that the default position is the most important thing to watch.

The lesson is also about the responsibility of the platform. The companies that build the infrastructure of the digital economy are not ordinary businesses, and the case was Europe's argument that they cannot behave like ordinary businesses. The objection is the April 2016 story, and the story is the lesson: the platform that everyone needs can become the platform that no one can challenge, and the challenge was announced on Wednesday. The case would take years, and the years would decide the shape of the mobile world. For product leaders, the case is a reminder to ask where their defaults come from and who they favor. The choices that seem technical, the pre-installed app, the default search engine, the home screen position, are the choices that shape markets, and the shaping is the responsibility. The objections were the beginning of the process, and the process was the lesson in how slowly the rules of the digital economy are written. The case was also the lesson in the power of the consumer: the regulators acted because the consumers could not, and the consumers were the reason the market needed the watch.

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