Groundhog Day: New FTC Probe To Revisit Google’s Control Over Android

Bloomberg reported earlier this morning that the Federal Trade Commission (FTC) is in the early stages of a new investigation into Android. Coordinating with the US Justice Department, the FTC will take the lead in the new antitrust inquiry.

When the FTC settled with Google in 2013 and closed its investigation into Google’s alleged “search bias” and vertical search practices, among other areas, it appeared the Commission had given some consideration to Android. At the time, FTC Commissioner Maureen Ohlhausen stated:

I also agree with the Commission’s decision to close the investigation into, and ultimately not to pursue any type of remedy with respect to, Google’s allegedly exclusive arrangements in the search syndication and mobile search areas. In neither area did the investigation reveal evidence that Google was coercing its partners into restrictive arrangements; rather, the evidence showed that virtually none of Google’s partners are seeking to switch any of their business to non-Google providers. Simply put, I was not presented with any evidence to indicate that these arrangements were anything other than procompetitive.

Arguably, Android wasn’t a formal part of the previous FTC investigation. Regardless, the new inquiry appears to be exploring generally the same questions as the European Commission’s Android investigation — namely, whether Google’s control over the operating system unfairly disadvantages competitors.

A number of third-party complaints in the US and Europe have been filed over the question of Google “tying” the pre-installation of its own apps to use of Google Play by Android OEMs, which allegedly discriminates against competing third-party apps.

Android is installed on about 80 percent of smartphones worldwide, although some versions in use are “forked” (e.g., Amazon Kindle). The operating system is open-source, and any handset maker can use it. This is Google’s chief defense to any claims that it is abusing market power.

If manufacturers want Google Play access, however, they need to conform to certain rules and requirements around the pre-installation and positioning of selected Google apps. These rules were recently relaxed by Google somewhat.

The Russian competition authority recently conducted a similar investigation of Google, prompted by a complaint from Yandex. Yandex had argued that Google was violating Russian competition law by requiring pre-installed or default Google apps on Android. The Russian regulators agreed.

Despite the fact that the Russian government is currently in disfavor in the West, this decision could fuel a similar finding in Europe, which in turn might influence the FTC.

One potential global scenario that Google could face is that it would be barred from requiring that its apps be pre-installed or in any sort of privileged screen position vs. competitive apps. This is analogous to what happened in Europe when Microsoft was required to offer “browser choice” and essentially unbundle its Explorer browser from the Windows operating system.