European regulators opened a second front in their antitrust
probe of Google Inc., launching a formal investigation of whether
the U.S. Internet company used its position as the maker of
Android, the most popular software operating system for
smartphones, to favor other Google apps and services.
"Smartphones, tablets and similar devices play an increasing
role in many people's daily lives and I want to make sure the
markets in this area can flourish without anticompetitive
constraints imposed by any company," said the European Commission's
antitrust chief, Margrethe Vestager.
The new investigation of Android came as the commission filed
formal charges against Google for allegedly abusing its position as
the leading search engine by favoring its own Shopping service,
after a separate five-year investigation.
A Google spokesman declined to comment on the Android
investigation. A memo the company sent to its employees Tuesday,
ahead of the announcement, said "Android has lowered prices and
increased choice for consumers."
In an interview last October 2014, Google product chief Sundar
Pichai said he welcomed an antitrust investigation into Android.
"I'm glad the EU is looking at it," Mr. Pichai said. "We welcome
scrutiny on this."
Android powered roughly 80% of smartphones that shipped
world-wide in 2014 according to Strategy Analytics, and Samsung
Electronics is the biggest seller of Android phones.
The Android investigation focuses in part on concerns that
Google effectively forces smartphone makers to install many of its
own apps on Android devices, and to set some like Google Search as
defaults.
Rivals have complained that this makes it hard for them to
strike deals for their services on Android smartphones. Microsoft
Corp., for instance, has said Google's conduct has impeded
distribution of its Bing search engine. A Microsoft spokesman
declined to comment on the Android investigation.
Google has long argued that Android is an "open" operating
system that smartphone makers can adopt and modify.
Some companies that have tried to sell Android smartphones that
use a "forked" version of the operating system and that don't
include Google's popular apps have not been successful. Amazon.com
Inc. was forced to write-off inventory of its Fire smartphone after
poor sales.
Many Google contracts have required smartphone makers to set
Google search as the default, and use a bundle of Google apps, if
they want to include popular Google services on their devices, such
as Google Maps or the Play store for apps. Details of those
contracts, known as the "Mobile Application Distribution
Agreement," were first reported by The Wall Street Journal last
year.
"It is market-critical for Android [smartphone makers] to
install the Play Store and Google Maps on their smartphones," said
Rajeev Chand, managing director of Rutberg & Co., a
mobile-focused investment bank. "Consumers expect it."
In recent years Google has increased to roughly 20 the number of
apps and services that it requires smartphone makers to install
alongside Maps and the Play store, according to a person familiar
with the matter. In the contracts disclosed by the Journal last
year, dating from 2012, smartphone makers were required to install
about 10 additional apps. Among the newly required apps are Google
Play Music, Google Play Books, Google Play Movies and the company's
smart digital assistant app Google Now, according to the person
familiar with the matter.
The formal Android investigation stems from an inquiry the
Commission began last year.
Write to Rolfe Winkler at rolfe.winkler@wsj.com
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