Author(s): Geoff Blaber
Tomorrow the European Commission is expected to deliver its decision following an investigation of Google's use of its Android operating system and its role in distributing accompanying apps and services. The case is being heralded as Google's "Microsoft moment", referring to the commission's edict in 2001 to stop Microsoft bundling its Internet Explorer browser with Windows.
The decision is likely to be backed by a sizeable fine that will grab headlines. However, what it means for the future of Android and the way in which apps and services are distributed is highly uncertain. The size and scale of the Android ecosystem, coupled with the business model interdependencies of Google, manufacturers, operators and app developers, mean the case is decidedly more complex than that of Microsoft's Internet Explorer bundling. There's a substantial risk that despite the commission's best intentions, its action results in unintended consequences that ultimately penalize the consumer.
The strength of Google's position has invited increased scrutiny by the European Commission. In the wake of the 2017 verdict on Google Shopping results, Android was a natural next target. With more than 2 billion active devices and stringent requirements for manufacturers about how Android is used when coupled with Google apps and services, it is unsurprising the commission has sought to take action.
Although an open-source operating system, Android was introduced as a vehicle for Google's licensable apps and services and to extend Google's business model as engagement shifted to mobile devices. In this context, Android has been incredibly successful.
And yet Europe's stance is arguably six to eight years too late. The commission is shutting the stable door after the horse has bolted. A related problem is that there is no clear alternative to Android. Apple's iOS is an alternative from a consumer perspective, but Google has definitively beaten any licensable alternatives. Had the commission's determination been made even five years ago, it would have opened a door of opportunity for others such as Microsoft. Today most contenders are themselves built on an Android code base.
Although a move to separate apps from the operating system may help foster competition over the longer term, Android has served its purpose in cementing Google services in consumers' minds. At least in the West, manufacturers will still have to offer Google services to be competitive and meet consumer demand. Even if devices are shipped without these apps, users will seek them out. Any move to unbundle Google apps from the platform is likely to have limited impact on competition, at least in the short to medium term.
However, such a move would be likely to dent Google's ability to control Android and limit fragmentation. Google's apps and services have been the avenue through which Google has policed the Android ecosystem. Access to these services comes with certain requirements, meaning manufacturers follow stipulations on how Android is implemented. This includes limitations on Android versions and a requirement that manufacturers do not offer forked versions of Android. This was a particular focus of the European Commission's investigation.
Although Google comes under frequent attack for the extent of fragmentation in Android, it has in fact used its carrot and stick to great effect given the size and breadth of the ecosystem. Losing this control could prove detrimental to Google, manufacturers and ultimately consumers. The consequences are potentially wide-ranging. The commission's decision could simply mean that fragmentation worsens, resulting in inconsistent app performance and a poorer user experience for consumers.
However, it could also see Google deciding to change or adapt the Android business model if it concludes that open-source development is no longer feasible, practical or economically viable. The cost of software development for manufacturers has fallen considerably in the past 10 years. An element that the ruling may overlook is the role Android has played in enabling competition and radically reducing the cost of hardware. It's not inconceivable that hardware gets more expensive if the Android model changes.
This is just a summary of the factors at play. We caution that the European Commission should take a broad and pragmatic view of the complexity of the Android ecosystem, its interdependencies and relationship to Google's business model. Google's strength is an understandable concern, but overly arbitrary measures could ultimately hurt the consumer and only strengthen the position of a primary competitor in Apple.