Opening an antitrust action against a company whose service offers better choice and flexibility than its main rival would be a bizarre move. But that is exactly what a group of 36 state attorneys general did when they sued Alphabet Inc.’s Google on Wednesday.
The announcement follows a series of major governmental antitrust actions against the internet giant. Last year, the US Department of Justice and dozens of states filed complaints against Google over its dominant search engine business, while another group of states targeted the company for its ad-technology services. While the prior suits had legitimacy, this latest one seems like overreach.
The states allege Google is abusing the dominant market power of its Android smartphone operating system by forcing app developers to use its payment system, where it charges a fee of as much as 30% for digital content or services sold on its mobile app store called Google Play. The filing also charges the company of paying off Samsung Electronics Co., maker of the Galaxy phone, to not develop a competing billing offering and incentivizing developers from distributing their software outside its app store. A Google spokesperson defended its practices in a blog post. He cited the fact most Android devices ship with two or more app stores preloaded and that Amazon.com Inc. Fire tablets don’t even have the Google Play Store installed.
I generally do not like to rush to the defense of $1.7 trillion technology giants, but Google is right. There is a key flaw in the government’s argument. While Apple Inc.’s iOS platform doesn’t allow other app stores, the Android operating system gives consumers the ability to install app stores from any third party and allows users to install apps from external sources.
How can you argue about a Google app store monopoly when you aren’t forced to use its app store? This freedom means developers can circumvent Google Play’s fee structure and payment system, making much of the government’s points moot.
The lawsuit also alleges Google makes the process of installing apps from external sites unnecessarily cumbersome with misleading warning screens about possible security risks. But Nokia researchers have found Android does have a greater incidence of malware, specifically because it gives users the ability to install unvetted apps, validating the company’s caution.
Let me be clear. Google does deserve antitrust scrutiny. I applauded last year when the internet giant was sued for egregious actions surrounding its search engine, where it has true monopoly power. Google’s anticompetitive practices — including favoring its own offerings in search results and its use of exclusionary distribution agreements to make its search the default option on the iPhone — are flagrant and should be restricted.
But going after Google for its app store policies, which are invariably more open and competitive than Apple’s, isn’t a wise use of limited time and resources. Beating the company in court isn’t going to be easy. Antitrust enforcers shouldn’t get distracted by less substantive arguments and should focus their efforts instead on the larger, more important issues.
Bloomberg
