Google Defense Ignores the Reality of Its Dominance
- Paul Thurrott
- Jul 08, 2021
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25
Google has responded to its latest antitrust lawsuit, arguing that consumers have more choice on Android than they do on iPhone. That’s true, but it’s also irrelevant.
“We built Android to create more choices in mobile technology,” Google senior director Wilson White writes. “Today, anyone, including our competitors, can customize and build devices with the Android operating system — for free.”
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Neither of those statements is true. Google built Android because it feared that smartphone makers would ignore its search business in a market that was then quickly overtaking the desktop PC market and would deprive it of billions in ad-based revenues. And no company can build Android-based devices for free; what they can build for free is Android Open Source Project (AOSP) devices, that lack the Google Play services and Google apps that make an Android device an Android device. For those rights, companies must pay.
And that’s just the opening paragraph.
So rather than tear down this silliness word-by-word, let’s move up to a higher level and examine some key themes in Google’s defense of its anti-competitive actions. They are:
Google Play competes vigorously and fairly. That one is so funny it’s hard to take seriously. But Google’s argument here has little to do with that phrase. Instead, it notes that the 37 attorneys general who are suing the firm are “ignoring” that Android competes with iPhone, and that iPhone accounts for more revenues in mobile apps than does Android. Again, true but irrelevant: Governments are antitrust regulators are free to define markets as they wish, and Android, with its over 3 billion active devices, absolutely constitutes a market in and of itself. (In the U.S., which is the relevant market here, Android controls over 50 percent of the market by sales volume and probably usage.) And the point of antitrust in the U.S. to protect consumers, and since half of all U.S. consumers are subjected to the end results of Google’s alleged anticompetitive business practices, going after the apps store that delivers over 90 percent of those apps to them doesn’t just make sense, it’s the right thing to do.
Android increases competition and choice. Google argues that consumers have choices other than the Play Store, much like Microsoft argued that consumers had choices other than Windows over 20 years ago; in both cases, these firms controlled over 90 percent of the market and so this argument is both true and irrelevant. Plus, as Epic demonstrated in its antitrust suit against Google, the ability to “side-load” apps on Android is no strength as this process is non-discoverable, difficult, and comes with several warnings and harming the security and integrity of the device. Google also notes that the Play Store “allows developers to communicate with their customers outside the app about subscription offers or a lower-cost offering on a rival app store or the developer’s website,” unlike Apple. That’s true, but … you know. Being slightly better than the worst abuser doesn’t make you an angel, Google. It just makes you an abuser.
Google Play helps developers succeed. After arguing about all the wonderful other choices that Google’s customers have, the firm turns the tables to claim that the Play Store—again, with 90+ percent market share—has generated over $80 billion in revenues for developers. (I guess that means that all the other stores combined generated less than 10 percent of that.) It’s hard to balance the “choice” argument with the dominance that these numbers reveal since virtually no one is making other choices.
The economic model of Play and Android benefits developers. This is an interesting title since Google immediately argues that its “rules on Android and Google Play benefit consumers,” and not developers. But Google claims that 97 percent of the developers who target Google Play do not “sell digital content” (whatever that means) through the Store and thus aren’t charged fees. Of the remaining 3 percent, the vast majority only pay a 15 percent fee since Google copied Apple and lowered its fees for developers who earn less than $1 million per year. Again, true but irrelevant: All developers that target Google Play must use Google’s payment processing system, which is at the very heart of this suit. And don’t forget, Google earns money through tracking and advertising and that requires devices running real Android. So one might argue that its ad business subsidizes its store in ways that Apple won’t/can’t. In other words, just using Android harms consumers today. “Developers who don’t like our policies can still distribute their apps to Android users directly or through rival app stores without using our billing system or paying us a cent,” Google claims in the most nonsensical argument I’ve ever read.
Case closed.