EU’s antitrust ruling against Google more of an observation rather than a prescription

Although the ruling should provide smartphone makers the ability to develop phones based on Amazon’s Fire OS, Google limits the adoption of such forks, as termed in the industry, through its licensing model. Essentially, the ruling is not likely to significantly change Google’s licensing model and the revenues derived from it.

With the European Union’s antitrust judgment going against Alphabet Inc’s Google, analysts and industry executives opine that it will provide more room for other software developers including, Microsoft Corp and Samsung Electronics Co; however they agree that it still leaves them at a disadvantage.

On Wednesday’s the EU concluded that since 2011, Google had illegally strengthened its dominance in the mobile business by forcing Android device makers to pre-install its Chrome browser, its Google Search along with its Google Play app store; it paid them to pre-install only Google Search while blocking them from using modified versions of its mobile operating system, Android.

According to a press release by the EU as well as several EU sources, who spoke on the condition of anonymity, the ruling is aimed at allowing more players, including Lenovo Corp, Samsung and other phone makers in the smartphone segment, which have been so far restricted from selling alternative software from the likes of Amazon and Microsoft without the device losing much of its consumer appeal.

According to Ian Fogg, vice president of analysis at OpenSignal, following the ruling, smartphone vendors could even charge the other software makers to have their browsers or search engines set as the default on Android smartphones.

Smartphones that features Microsoft’s Bing search engine or Amazon’s Alexa should also be able to pre-install popular apps, including Google Search, Google Maps and YouTube, said EU sources.

Lenovo, Microsoft, Samsung and Amazon declined to comment.

As per an executive from a high-end Android device maker, smartphone makers are hesitant to promote lesser alternatives than that offered by Google while smaller firms lack the market share to significantly impact Google’s business.

Google can continue on remain on existing model of paying device makers to install exclusively its search engine, a business from which it derives most of its revenues, on a device-by-device basis.

Significantly, the EU ruling did not quantify or set any limit on Google’s ability to outbid smaller players for installing a search engine.

Google is “systematically set to continue to dominate the industry,” observed Robert Marcus, a former member of Microsoft’s mobile strategy team who is now general partner at Quantum Wave Capital, an investment firm.

Of note is the fact that the EU ruling did not specify that Google will have to provide its apps to smartphones with “forks”, which means that devices that features Amazon’s Fire OS will continue to lack services including Google Maps, said industry analysts.

This omission in the ruling underscores the fact that the ruling is more of an “observation” rather than a “prescription”, said Kumar Shah, managing director of Transit Capital, an investment firm.

Further, smartphone vendors who try to adopt forks, are unlikely to face a friendly reception by wireless carriers, who are focused on rolling out high-speed 5G networks and would prefer that “handset makers [are not] distracted by side issues,” said Fogg.

According to the ruling Google will have to stop its illegal practices within 90 days in order to avoid fines; alternatively it could delay the implementation by going on appeals.

Google has not disclosed how it would adjust its practices if it were to lose appeals nor whether its changes would be limited to the EU or it will be on a global scale.


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