net.wars

It is just over a year since the EU fined Google what seemed a huge amount, and here we are again: this week the EU commissioner for competition Margrethe Vestager levied an even bigger €4.34 billion fine over "serious illegal behavior". At issue was Google's licensing terms for its Android apps and services, which essentially leveraged its ownership of the operating system to ensure its continued market dominance in search as the world moved to mobile. Google has said it will appeal; it is also appealing the 2017 fine. The present ruling gives the company 90 days to change behaviour or face further fines of up to 5% of daily worldwide turnover.

Google's response is to say that Google's rules have enabled it not to charge manufacturers to use Android, made Android phones easier to use, and are efficient for both developers and consumers. The ruling, writes CEO Sundar Pichai, will "upset the balance of the Android ecosystem".

Google's claim that users are free to install other browsers and search engines and are used to downloading apps is true but specious. It's widely known that 95% of users never change default settings. Defaults *matter*, and Google certainly knows this. When you reach a certain size - Android holds 80% of European and worldwide smart mobile devices, and 95% of the licensable mobile market outside of China - the decisions you make about choice architecture determine the behavior of large populations.

Also, the EU's ruling isn't about a user's specific choice on their individual smartphone. Instead, it's based on three findings: 1) Google's licensing terms made access to the Play Store contingent on pre-installing Google's search app and Chrome; 2) Google paid some large manufacturers and network operators to exclusively pre-install Google's search app; 3) Google prevented manufacturers that pre-install Google apps from selling *any* devices using non-Google-approved ("forked") versions of Android. It puts the starting date at 2011, "when Google became dominant".

There are significant similarities here to the US's 1998 ruling against Microsoft over tying Internet Explorer to Windows. Back then, Microsoft was the Big Evil on the block, and there were serious concerns that it would use Internet Explorer as a vector for turning the web into a proprietary system under its control. For a good account, see Charles H. Ferguson's 1999 book, High St@kes, No Prisoners. Ferguson would know: his web page design start-up, Vermeer, was the subject of an acquisition battle between Microsoft and Netscape. Google, which was founded in 1998, ultimately benefited from this ruling, because it helped keep the way open for "alternative" browsers such as Google's own Chrome.

There are also similarities to the EU's 2004 ruling against Microsoft, which required the company to stop bundling its media player with Windows and to disclose the information manufacturers needed to integrate non-Microsoft networking and streaming software. The EU's fine was the largest-ever at the time: €497 million. At that point, media players seemed like important gateways to content. The significant gateway drug turned out to be Web browsers; either way, Microsoft and streaming have both prospered.

Since 1998, however, in another example of EU/US divergence, the US has largely abandoned enforcing anti-competition law. As Lina M. Khan pointed out last year, it's no longer the case that waiting will produce two guys in a garage with a new technology that up-ends the market and its biggest players. The EU explains carefully in its announcement that Android is different from Apple's iOS or Blackberry because as vertically integrated companies that do not license their products they are not part of the same market. In the Android market, however, it says, "...it was Google - and not users, app developers, and the market - that effectively determined which operating systems could prosper."

Too little, too late, some are complaining, and more or less correctly: the time for this action was 2009; even better, says the New York Times, block in advance the mergers that are creating these giants. Antitrust actions against technology companies are almost always a decade late. Others buy Google's argument that consumers will suffer, but Google is a smart company full of smart engineers who are entirely capable of figuring out well-designed yet neutral ways to present choices, just as Microsoft did before it.

There's additional speculation that Google might have to recoup lost revenues by charging licensing fees; that Samsung might be the big winner, since it already has its own full competitive suite of apps; and that the EU should fine Apple, too, on the basis that the company's closed system bars users from making *any* unapproved choices.

Personally, I wish the EU had applied more attention to the ways Google leverages the operating system to enable user tracking to fuel its advertising business. The requirement to tie every phone to a Gmail address is an obvious candidate for regulatory disruption; so is the requirement to use it to access the Play Store. The difficulty of operating a phone without being signed into Google has ratcheted up over time - and it seems wholly unnecessary *unless* the purpose is to make it easier to do user tracking. This issue may yet find focus under GDPR.

Illustrations: Margrethe Vestager.

Wendy M. Grossman is the 2013 winner of the Enigma Award. Her Web site has an extensive archive of her books, articles, and music, and an archive of earlier columns in this series. Stories about the border wars between cyberspace and real life are posted occasionally during the week at the net.wars Pinboard - or follow on Twitter.