Having just reached a legally-binding settlement
with the European Commission in an anti-trust investigation
over its deceptive use of paid ads appearing as search results indistinguishable from independent results and its anti-competitive blocking of other services on sites that use AdSense, the company now faces a new investigation
over its Android licensing deals. Claims from rivals such as Nokia, Microsoft and FairSearch.org
allege that Google licenses Android to device manufacturers below cost, and makes demands about the placement of Google services and products.
In effect, the rivals argue that Google uses Android as little more than a vehicle to sell its services
, which in turn offer the company an opportunity to sell more ads, reports the Financial Times
. Advertising makes up around 96 percent of Google's overall revenue, meaning that for the most part everything Google offers is ultimately intended to bolster its ad business -- either by giving the company more opportunities to advertise, or by collecting more data on users that is then used to sell and target advertising.
The EC was able to settle with Google over its search business practices, forcing the company to label Google-owned properties in the search results and requiring to to show results from rivals in searches where Google sells paid search results, such as in reviews for local businesses. The agreement also requires Google to auction links in search products where all the results are paid ones (such as Product Search
) to all comers. It was also forced to stop demanding AdSense customers abandon any rival ad programs on the same sites. In short, the EC was able to win more binding changes to Google's practices than the US government when it settled for a very watered-down consent decree
over the same issues.
The new investigation into Android licensing is said to be informal at this stage and may not result in a full investigation unless the claims of MS and Nokia are discovered to be correct. Google has issued a statement denying the charges, saying that "Android is an open platform that fosters competition. Handset makers, carriers and consumers can decide how to use Android, including which applications they want to use" -- a statement that does not directly deny any of the allegations made by the company's smartphone rivals.
Although Android itself is given away at no cost, companies that want to include popular Google apps or services are required by the search giant to pre-load an entire suite of Google products, and give them prominent "default" placement on the device, unfairly shutting out rival offerings such as (for example) Bing or Nokia Maps. The deals mean that Google loses considerable money on Android overall, creating an artificial barrier to entry that harms rival app and services companies like BlackBerry, TripAdvisor, Expedia and others.