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Europe’s Antitrust Investigation into Google Could Change the Cellphone Industry

In a long line of European regulators taking aggressive stances against American tech companies, Margrethe Vestager, the European Union’s (EU) antitrust chief, is determined to pursue antitrust claims against Google.  In addition to bringing formal charges against Google for allegedly abusing its dominance in web searches, Vestager has opened a formal investigation into Google’s practice of “pre-installing its apps and services onto Android smartphones,” presumably based on the theory that doing so gives Google’s software preferential treatment compared to its competitors.

Pre-installing apps and services onto smartphones is quite commonplace for many other tech companies such as Apple and Microsoft.  The decision to investigate Google, which, according to the New York Times, has an 81 percent market share in operating systems, could affect all other cellphone makers should the investigation lead to the EU bringing formal charges against Google.  Ian Fogg, a cellphone analyst, predicts that if Europe brought formal charges, Google may open its mobile software to rivals in order to avoid large penalties.  The present charges against Google for its practices in web searches, for example, reportedly could lead to penalties exceeding €6 billion, approximately 10 percent of Google’s 2014 revenue.  Thus, the pressure for Google to settle may be quite strong.

Some believe – President Obama included – that the EU is thinking like a commercial entity rather than an impartial governmental body.  America’s dominance in technology is well recognized and, if European regulators continue their aggressive stance against American tech companies, political tensions may begin to rise.  In February 2015, President Obama warned Europe against making decisions that would penalize large companies like Google and Facebook because he believes such decisions are “commercially driven.”  Likewise, Mr. Daniel A. Sepulveda, a deputy assistant secretary in the U.S. State Department’s Bureau of Economic and Business Affairs, stated when asked about Google’s legal troubles in Europe: “It’s important, . . . that the process of identifying competitive markets and remedies be based on impartial findings and not be politicized.

The investigation into Google’s practice of pre-installing cell phone apps is at its beginning stages, however, and could take years to complete.  By that time, who knows how much the cellphone industry will have evolved.