Rival’s small market may have led to end of Google probe

Saturday, April 22nd, 2017

Effect of tech giant?s operating system on competition flagged as concern in memo

The Vancouver Sun

TORONTO The department of Canadian Heritage expressed concern about the impact Google’s operating system is having on small technology companies, and suggested the reason why the Competition Bureau dropped its antitrust investigation is because Android isn’t on enough mobile phones to warrant a probe.

According to a memo prepared last June by Heritage’s broadcasting and digital communications branch, and obtained by the Financial Post through an access to information request, the 50.5 per cent market share Android enjoys in this country was much smaller than the 90 per cent seen in the European Union, which has a “larger relative justification” to press forward with its own investigation.

The European Commission levied several charges against Google in the past year, including allegations that tablet and smartphone manufacturers and network operators who use the company’s Android operating system are subject to “unjustified restrictions and conditions”, which prevent them from freely choosing the search engines and browsers installed on their devices.

In total, the Commission has brought three antitrust cases against Google in the past two years: In addition to the Android case, the Commission has alleged the firm prioritized its Google Shopping service in search results and blocked rivals in search advertising on its AdSense platform.

If the allegations levelled by the European Commission at Google are upheld, the company could be fined up to US$7.4 billion.

Canada’s Competition Bureau closed its own investigation into Google last April after finding that the firm did not use its market position to disadvantage competitors.

The investigation, launched in 2013, determined that Google had used anti-competitive clauses in contracts for its online AdWords advertising software, but the company removed those clauses in 2013 and agreed not to reintroduce them in Canada for five years.

“The Bureau’s review focused on facts and evidence related to allegations of anti-competitive conduct affecting the Canadian marketplace,” a Competition Bureau spokesperson said. “The Bureau’s conclusions regarding each of the allegations were based upon a careful review of the evidence relevant to the Canadian market, obtained by the Bureau over the course of its investigation.”

The spokesperson added that the Bureau “will be closely following developments with respect to Google’s ongoing conduct, including the results from investigations of our international counterparts.”

The Heritage department memo expressed concern that small and medium-sized Canadian technology companies could be put at a disadvantage by “practices such as pre-installation of operating systems, default search engines and manipulation of search engines,” all areas where the European Commission has argued Google skewed the market against competitors with Android.

“Canadian Heritage strives to ensure that Canadian creators have the tools necessary to thrive in today’s digital world,” the department said, but referred questions about the Competition Bureau’s decision to drop its antitrust investigation to the bureau itself.

Earlier this week, Google agreed to pay an approximately US$8 million fine for antitrust violations in the Russian mobile market. The Federal Antimonopoly Service of Russia found the company had abused its dominant position following a complaint by Russian tech company Yandex that accused Google of requiring smartphone manufacturers to pre-install Google Play on their products.

Google has strongly objected to the European Commission’s charges. Last fall, the company’s senior vice-president and general counsel Kent Walker argued that “Android hasn’t hurt competition, it’s expanded it.”

“Android is the most flexible mobile platform out there, balancing the needs of thousands of manufacturers and operators, millions of app developers and more than a billion consumers” he added. “Upsetting this balance would raise prices, hamper innovation, reduce choice and limit competition.”

Many of Google’s deals with smartphone makers require an initial suite of Google apps come pre-installed on devices, which the firm says is what allows it to distribute Android for free and further its investments in the platform. Financial Post

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