Why despite the EU's €4.3bn Google Fine, things won't be fine.

A few days ago, the European Union decided to hit Google with a €4.3bn fine. The reasons put forward by the European Commission focus on the company’s MADA or Mobile Application Distribution Agreement, that all device manufacturers that want to license Google’s apps and include the Google Play Store with their devices are forced to sign.

MADA has been sporadically discussed by the tech community for a few years now, since the 2014 leaks of several MADA agreements from years past. Here is an article at re/code from 2014. Another article from 2014, by The Information, outlines how Google has been modifying its licensing agreements to include more restrictions for OEMs. The EU has been preparing its case against Google for at least 2 years; here is a 2016 article by The Verge discussing the investigation.

I have been using iPhones for the better part of the last decade, but due to my work both at AthensBook and Beat, I have always kept an Android device close by, be it as a test device or — for relatively short periods of time — as an EDC. And I have found that, despite its stated ‘openness’, the typical install of Android is a much more ‘limited’ operating system than iOS. I’ve written before about Google’s hypocrisy about openness using CalDAV as an example, but a quick look at Chrome on Android, the crippling bugs with IPSec/L2TP VPNs across two versions of the OS, demonstrate that Google is very selective as to what to ‘open’, to whom and under what terms it cares about the products it creates. By comparison, ‘closed’ Apple does a much better job at properly supporting several standards out of the box in iOS, despite, of course, the numerous lock-in tactics it also employs.

Android, as an operating system, remains — of course — based on an open source foundation: GNU/Linux, a number of open source libraries at its core, and an assortment of open source libraries, runtime, applications and APIs. Yet over the past few years increasing parts of the core libraries and applications required to create the experience most people consider ‘standard’ on Android — at least in the West — are not part of the open source version of the OS (what is widely known as the Android Open Source Project or AOSP), but, instead, are provided by Google via the Google Play Store in the form of downloadable packages that are updated independently from the operating system. And most application developers have learnt to depend on those libraries to create the types of user experiences and rich applications we’ve come to expect on a modern smartphone. Push Notifications, Mapping, single sign on, casting to Google’s Chromecast, cloud syncing and saving,  support for Google Drive, analytics and Google Fit APIs are all part of the Google Play Services.

Then it’s the matter of applications. Erstwhile open source core apps that shipped with AOSP have been abandoned by a Google, and swiftly replaced by proprietary versions offered for free by Google through the Google Play store. This includes most of the applications that once came with the OS, including the phone dialer, calendar, contacts app etc. None of those are open source anymore. This, among other things, were detailed in 2013 by ArsTechnica, in an article that got refreshed just this week in light of the €4.3bn EU fine.

The main reason Google stated for these changes  was the reduction of fragmentation and the provision of a smoother, automatic and faster way for end-users to update their applications, decoupling Operating System updates from core library and application updates, thus ‘liberating’ them from the, sluggish (at best), pace OEMs update the operating system versions on their devices.

Reviewing the Android landscape several years later, however, it remains a highly fragmented platform, with the vast majority of older devices missing out on security updates, bug fixes and new functionality. At the time of writing this post, averaging the Android version breakdown percentages for a few popular applications in Greece, only around 20% of the user base is running Android 8.0, the version of the operating system that was released 11 months ago, while another 20% are still running Android 6.0, released in October 2015. The global figures Google provides on its Android Developer web site paint a much bleaker picture. Note that there are still low-end devices sold today with Android 6.0 — and those devices will probably never get a newer version of Android. Google, repeatedly faced with fierce criticism about its inability to fix this fundamental problem with its ecosystem, announced, last year, Project Treble, aimed at decoupling even further platform/hardware specific code (drivers etc.), OEM code and telco code from the operating system, thus — theoretically — enabling older devices to be updated without requiring involvement from all those parties, but also faster updates. It remains to be seen whether this move will be 1. successful in further homogenizing the Android ecosystem, breathing new life to perfectly functional one or two year old devices that have been nothing but forgotten by their manufacturers and thus unsafe, or increasingly unusable, or 2. Do it in a completely neutral manner, as Google wrests even more control from both OEMs, silicon manufacturers, devices manufacturers and telcos and dictates to an even higher extent how and what the devices must (and must not) include, how software is supposed to run, which of its competitors can be present.

Judging by the performance of its Google Play ‘decoupling’ programme, either Google has been too incompetent to reduce fragmentation and create a consistent, secure and functionally optimal environment for both application developers, its OEM partners and end-users or reducing fragmentation has never really been a goal for them. I have no doubt that Google is a very efficient organisation with smart and competent people, so the former explanation probably doesn’t hold any water. And I’m sure that the prime reason for the Google Play Services gradual usurping of core Android functionality was not the crippling of the openness of Android as a complete operating system (although it was certainly a very, very crucial side-effect that solidified Google’s role in the ecosystem and eliminated any semblance of differentiation or competition outside of Google’s sphere of influence and control.)

Which brings us to search. One of the major complaints the EU made about Google’s abuse of position, is how it forces OEMs to install, promote and preconfigure its own web browser and its own search engine. Accusations very similar to those Microsoft faced about twenty years ago.

Chrome on Android provides a ‘canned’ list of alternative search engines, including Yahoo!, Bing, Ask and AOL. Arguably, with the exception of Bing, these are just token options provided by Google so as not to be blatantly abusing its position and forcing Google Search down people’s throats — or at the very least accused of doing so. But that’s exactly what it does. There is no way to add another search engine as default, other than those already listed there; most notably, Duckduckgo, a privacy conscious and increasingly popular search engine is completely missing from the list of options Google offers for its pre-installed and typically sole browser in the vast majority of Android devices. And that’s even though DuckDuckGo has a larger market share than both Ask and AOL of course in both Europe and the US.

The only place where Google hasn’t had the chance to completely dominate is China, where manufacturers can and do get away with not signing up to MADA and offer alternatives to Google’s Play and core applications. But that’s just because Google’s Search engine, with around 1.5% of the market, is not exactly present in China anymore since 2013. In euro/dollar terms, and given that a very small percentage of device sales are Google’s own devices, the company is absolutely killing the economics of the Android ecosystem, funneling ever increasing amounts of money to its own coffers, while OEMs are left with low single digit profit margins. Obviously, Google has been very careful not to openly confront its OEM ‘partners’ with its own devices. Should those start growing in popularity — and coupled with the differentiation stranglehold MADA imposes on OEMs — Google would have a clear opening to corner more than 80% of the smartphone market and completely dominate it. They know this and are probably very careful not to upset their partners or the regulatory authorities.

Acting on Monopolies

Coming back to Europe, I’m saddened to say that the EU’s fine, as is typically the case in these cases, is too little, too late and won’t do a thing in preventing Google from continuing to abuse its dominant position, in both search and mobile, even if that means that it might be forced, in the short-term to slightly adapt its model to satisfy the regulators’ most pressing demands. In terms of impact, the fine is an absolute joke considering the amount of money involved in the global smartphone market, Google’s cash reserves and revenues.

When thinking about monopolies in general, you cannot but wonder how other governments, particularly the U.S. Government, have failed to act sooner. A single player with absolute dominance on the market’s dynamics and economics, both for search (which has been stagnant for years, leaving aside the various attempts at undermining the importance and openness of the web) and mobile, should have caused flashing red warnings at both sides of the Atlantic years ago.

In theory, you could have a case where a company becomes a monopoly in some market solely because its products are the best, there’s no strong-arm tactics or extortion involved, no interference, no contractual restrictions. Arguably Google fits that description — as did Microsoft in the 1980s and early 1990s, before, too, resorting to similar tactics with its OEMs. Google search was (and still is in many ways) head and shoulders above the competition. Even in those situations, however, a monopoly is a monopoly and in a well-functioning capitalist system it should be dealt with accordingly. That’s the whole point of anti-trust and competition law and what makes a market ‘free’.

What Google is doing here (and has been doing with the Android MADA for the better part of a decade) is not merely the possession of a much dominant position to Microsoft’s in the 1990s (in terms of both monetary value, volume and reach), the very definition of a monopoly, with everything this may mean about competition, progress etc., but the complete abuse of said position. And I’m surprised and disappointed the fine is not much larger, the actions stronger and the transatlantic support much more vocal.