Google under double scrutiny: Do tying arrangements really harm consumers?

The tech giant is being investigated on both sides of the Atlantic for requiring manufacturers that want to use its Android operating system pre-install its apps. But not everyone's convinced that actually matters to users.

First Look

The pressure is heating up for Alphabet’s Google, as two probes from the US Federal Trade Commission and the European Union into whether the tech giant is abusing the dominance of its Android mobile operating system are moving forward.

Last week, EU antitrust regulators said the company’s practice of requiring mobile phone manufacturers to pre-install Google Search and the Google Chrome browser if they get access to other Google apps harms both consumers and rivals.

“We believe that Google's behavior denies consumers a wider choice of mobile apps and services and stands in the way of innovation by other players,” European Competition Commissioner Margrethe Vestager said in a statement.

In the United States, the FTC has been meeting with the company’s industry rivals in an effort to determine whether Google is taking advantage of Android’s status as the world most popular mobile operating system to crowd out other firms, the Wall Street Journal reports.

But as the FTC expanded its probe this week, there’s another open question – do the tech giant’s practices really harm consumers?

While Google has also been paying some companies to have its search engine pre-installed as the default choice on many phones — including an estimated $1 billion to Apple – it’s not totally clear the practice causes as much harm to potential users as it does to the tech giant’s rivals, The New York Times reports.

Microsoft previously faced scrutiny in the late 1990s from Europe and the US over questions of whether its embedding of the Internet Explorer Browser into Windows constituted an illegal effort to extend its dominance over PC operating systems into Internet browsing.

But the company later settled those cases, while a slew of Internet browsers and search engines are easily available for download on many smartphones, notes the Times’ James B. Stewart.

Such deals, which are known as tying arrangements, aren’t necessarily illegal and originate in realms far outside of the tech industry.

“No one complains because they don’t have a choice of transmission manufacturers in their cars,” Scott Hemphill, an antitrust expert at New York University School of Law told the Times.

Google has also been facing a long-running charge from EU regulators that its promotion of its online shopping service in a Google search crowds out other rivals. Google has also faced anti-trust challenges in India, Brazil, and Russia.

But the Android cases filed in the EU and the US could be more significant, as the company’s relies on advertising sold through Android apps as a significant source of revenue. One analyst estimated the company made about $11 billion in ad sales through Android apps such as Maps, Search, and Gmail, Reuters reports.

The tech giant has sometimes zealously guarded the details of its arrangements to make its search engine the default option, successfully prevailing on a federal judge in California last year to prevent the public disclosure of terms of its deal with Apple.

Calling the deal a trade secret, the company also briefly pushed for civil contempt charges to be filed against an opposing lawyer for the software company Oracle who had inadvertently disclosed the deal’s terms in open court, court records show.

Apple, by contrast, won’t face this type of scrutiny because it produces both its own operating system and its own devices.

As industry site HotHardware notes:“If Google ever only made its own devices, it wouldn't face allegations like these, but because it relies on third-party vendors to produce Android smartphones and tablets, it opens up a major can of worms if it wants to push its agenda a little too hard.”