• Internal Code :
  • Subject Code : MBS664
  • University : Murdoch University
  • Subject Name : Strategic Management

A Case Study on Google's Breach On Anti-Trust Law

Introduction

Googles Dominance in the Market

European Union observed that google is dominating the market by providing various services like general internet search, app stores for mobile phones and licensable mobile phone operating systems. A general search service of google is behaving as a dominant in the international market for providing general internet services in all over European economic area that is in 31 states of EEA.Google has android as a licensable mobile operating system and it is available for licensing. This means that third party manufacturers of smart phone will get the authority to license and run the android feature on their smart phone. The case study will develop a better understanding of Googles illegal practices, its effects on virtual market and consequences faced by Google with a conclusion on case.

Breaching anti-trust laws

Under the rules of European Union, market dominance is not illegal. Though companies have a special concern to not dominate market or restrict the competition by their powerful market positions.
Google was involved in three types of activities

  1. Illegal tie up between google search and browser apps -
    Google has tie ups with the manufacturers of android mobile phone. It offered mobile app and services to the manufacturers as package.These apps include the Goggle play store, Google web browser and Google search engine as their default apps. According to Googles licensing conditionsit is impossible for manufacturers to pre-install some apps. Manufacturers at commission also stated that play store is a necessary app in the android devices.
  2. Illegal payment condition on installation of Google search -
    Google distributed financial assistance to some of the mobile manufacturers and mobile network operators for a condition that they will solely pre-install the Google search engine app on their overall android devices. Due to this competition for other competitors was harmedby Google by pre- installing apps in mobiles.
  3. Illegal blockade of development and distribution of completing android operating system -
    Google has seizure the manufactures for using any other alternative Android versions which was not approved by Google, and it named as Android Forks. Google contained this condition to manufactures that if they want to develop or install Googles proprietary apps like play store and Google search. For acquiring this Googles appsmanufacturers have to commit that they will not sell or develop any of their devices running on Android Fork.This exercise of Google has reduced the chances for android devises that are running Android Forks.

European Unions investigation commission has stated some points

  • Due to pre-installation of Googles app may have resulted in status quo bias. Many users who find the default search engine apps in their mobile phones likely to stick to them. The commission has found evidence of this thins as most of the android devices are consistently using Google search engines. It is already installed on users android devices and on windows mobile devices it has to be downloaded. This scenario changed incentives structure for manufacturers and users to download the app.This reduced the efficiency of the competitors to compete effectively.
  • The investigation committee observed that competitors of other search engines would have been incapable of compensating the manufacturers and mobile operating operators for loss of profits occurred due to Googles tie up. On this basis, the committee found itas an illegalwork the committee observed it in years 2011 to 2013 and tried to slowlystop this practice from 2014.
  • On third issue, the commission found that Googles powerof doing these things affected and restricted large number of manufacturers to develop and sale the devices made on amazons Android fork called as Fire OS. Thus, this affected the competitors channels to introduce new apps and services in particularly search engineservices.

Effects of Googles illegal practices

Google committed these three types of abuse at the time when there was a trend of mobile and internet. It was era of mobile and internet in the world and it was growing undoubtedly. It was a strategy of Google to create dominance in the industry of mobile and internet. Googles practice restricted the competition for the rival search engines. Due to pre- installation of apps and search engines it also restricted the innovation in mobile operating system apart from internet searches.Googles strategy of pre-installation and must installation of the Googles apps have restricted the rival search engine operators to collect more data from smart phone devices, consisting of search engines and mobile location data.

Consequences of breach of anti-trust laws for Google

According to commissions 2006 guideline on fines, the commission calculated the fine amount on the basis of Googles revenue from its search engine advertising services on mobile and android devices in European economic area. European Union has charged antitrust fine of 4.34 billion euros. It was almost double of the last years Googles charge in last few years. The fine was charges on account to loose Googles grip on android software, which was used by 80 per cent of smart phone users. The commission also started proceedings about concerning Googles conduct on android application and software. Google now has to stop all its illegal practices. Due to this google was responsible to face civil actions for the indemnitiesand it can be brought in by any person or business who has affected by its anti- competitive behaviour in front of the court of member state. The commission also continued with investigation for the restriction that Google has made on capacity of the third party websites to show search advertisement from Googles rivals.

Conclusion

The above case study concludes that google had adopted various illegal practices in market to reduce its competitors. It also dominated the virtual world and market of small mobile operating software and android devices. It acquired some firms and manufacturers financially to operate and pre-install Googles default apps in mobile devices. European Union charged very heavy amount on Google to stop these practices and warned Google to stop those practices in market.

References

Edelman, Benjamin, and Damien Geradin. Android and competition law exploring and assessing Googles practices in mobile.European Competition Journal12, no. 2-3 (2016) 159-194.
Perotti, Elena. Googles Antitrust Woes Around the World.Available at SSRN 3060298(2017).
Rosenboom, Nicole SR, ViktriaKocsis, and Jos DWE Mulder. Consumer Damages For Breach Of Antitrust Rules How To Reach Full Compensation For Consumers.Journal of Competition Law amp Economics13, no. 4 (2017) 710-728.
Santario Adam, and Nikas Jack E.U. Fines Google 5.1 Billion in Android Antitrustcase..Available atthe newyorktimes (2018)
PTI Regulators challenge Boeing to prove its Max jets are safe.Available at economictimes ,accesedon15march(2019).

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