The Observer view on how Europe can stand firm against Google

http://www.theguardian.com/commentisfree/2016/apr/24/google-european-union

Version 0 of 1.

Alphabet, Google’s parent company, plans to build a city, it emerged last week. Sidewalk Labs, an Alphabet subsidiary, is reportedly scouting locations for the endeavour, which would enable the company to test new technologies from superfast internet to autonomous cars in a community purpose-built as a “digital district”. It could yet turn out to be another Silicon Valley folly. But the plans underscore the extent to which the world’s biggest tech companies are tackling nation states head on, seizing responsibilities that used to be the preserve of governments, all while luxuriating in their own status as transnational entities, seemingly impervious to the oversight or control of any one country.

But not everyone is prepared to let this power grab continue without resistance. Last Wednesday, the competition commission of the European Union opened an investigation against Google, the second in as many years, alleging that the company “pursues an overall strategy on mobile devices to protect and expand its dominant position in internet search”, in the words of the commission’s fierce chief, Margrethe Vestager.

The commission’s problem is with Android, Google’s operating system for mobile phones. Although Google makes the software, it does not build any phones itself, preferring to license its products to third-parties such as Samsung or Huawei. As a strategy, it’s similar to the tactic with which Microsoft dominated the PC market in the 1990s. But unlike Microsoft, Google doesn’t even charge manufacturers to use Android. Instead, the whole thing is given away for free. But tied to Android is a whole suite of Google apps, all linked to Google’s Play app store: Google Search, YouTube, Gmail and more. To be allowed to pre-install the app store, a manufacturer must pre-install all these apps as well – 11 in total. The Google Search box must be placed on the first home screen, as must a folder with those other apps.

This is what the EU has a problem with. In its eyes, Google is using its dominance of the market in mobile operating systems to push an advantage in other areas. Google counters that manufacturers are perfectly free to pre-install other apps as well, and that users can delete (or at least deactivate) the Google apps once they turn on the phone. Its business model, it says, “keeps manufacturers’ costs low and their flexibility high, while giving consumers unprecedented control of their mobile devices”.

That may be true. When the EU last fought an American technology giant, it learned the hard way that what it sees as monopolistic overreach might not be viewed as such by users. Its action against Microsoft resulted in a legal victory for the competition commission, and a fine of €860m, with the case based, in part, on Microsoft’s unfair bundling of Windows Media Player with its desktop operating system. Microsoft was forced to release a version of Windows without the media player, dubbed Windows XP N, which sold next to nothing. By 2005, who wanted to buy a computer that couldn’t play MP3s out of the box?

But these days, manufacturers are showing more inclination to take Google on at their own game. Samsung, for instance, sells phones with Google’s suite of apps, and also an almost one-for-one replacement suite of Samsung’s own apps. The Korean company also makes its own operating system, Tizen, which it uses on low-cost smartphones made for the Indian market. It seems hard to believe that it wouldn’t jump at the opportunity to push its own creations, if given the chance. The question the EU must answer is whether Google has the right to withhold that chance, by virtue of making the root operating system.

It’s a question that will have ramifications far outside Europe. Android is by far the largest smartphone platform in the world, with an estimated 1.8bn handsets, and its share of the market is even larger in developing nations. For most of the next billion people expected to come online over the coming decade, there will be no such thing as the “mobile internet”: there will simply be the internet. Whether that internet is open or closed, and whether it is accessed on devices controlled by one company or open to many, will have a huge influence on the shape of development to come.

In answering that question, Margrethe Vestager has her work cut out for her. She is not only taking on Google, but also much of the US technology establishment, which views European interference in its internal matters as beyond the pale. And Washington seems unwilling, or unable, to act, content that the golden goose is at least based in America. Individually, the European states would be powerless to act. Google’s turnover exceeds the GDP of some of the smaller nations, and, as the squabbles over the company’s tax affairs have shown, it’s adept at playing a game of divide and conquer, turning nations against each other in a race to the bottom.

And so, at a time when the status of the EU is under unprecedented scrutiny, one of its most bureaucratic wings is making the best possible case for its continued existence. United, we can stand against the Googleplex.