The Future of Android (Premium)

As I'm sure you've heard, antitrust regulators in the European Union today fined Google $5 billion for abusing its power in the smartphone market. And they are requiring the search giant to make behavioral changes to prevent future abuse.

Looking over the complaint, I feel that the EU has adequately explained how Google has abused its market power, which derives from a monopoly in Internet search. It also addresses why Google did what it did: To ensure that its search monopoly would continue as the world transitioned from PCs to mobile. And Google, not coincidentally, now owns a near-monopoly in mobile devices too.

That said, Google's response is smart: The search giant claims that Android creates more choice, not less. That assertion addresses what's really important here. Not what happened. But how it impacts others. And Google claims there is no harm.

So let's step through this.

If you think back to the now-classic industry precedent for this case---Microsoft's antitrust issues in the United States, EU, and elsewhere---you can see the parallels. Microsoft, it was (correctly) alleged, attempted to leverage its Windows monopoly to enter new markets for web browsers (with Internet Explorer), music players and services (with Windows Media Player), and messaging (with Windows Messenger). This behavior was illegal because Microsoft had a monopoly.

The specifics, in some ways, are not all that important. What is important is that Microsoft's behavior had far-reaching ramifications that negatively impacted virtually every relevant third party.

For example, Microsoft harmed PC makers with its secretive and protectionist licensing pacts, most infamously by punishing IBM for its Lotus software by delaying IBM's access to Windows 95.

Microsoft also harmed application maker competitors by illegally bundling products and services with its dominant Windows OS and giving them an unfair advantage. And it did this while engaging in concerted FUD ("fear, uncertainty, and doubt") tactics aimed at discrediting superior competing products and services.

And Microsoft ultimately harmed consumers by denying them choice overtly, and by squashing industry newcomers that might have brought fresh ideas to market.

(One might argue that many of Microsoft's actions harmed developers, too. For example, Microsoft's attempts at subverting Java and bifurcating the web with IE-specific technologies are classic examples of an aggressive "embrace and extend" strategy that furthered Microsoft's strategic goals at the expense of developers.)

Antitrust works a bit differently in different locales. US antitrust law tends to be more about protecting consumers, for example, while the EU is very concerned about competitive fairness. But at a high level, this is really about harm.

And looking again at the new EU case regarding Android, the European Commission does cite multiple instances of harm.

Device makers are harmed by Google's actions in mul...

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