Insights & Analyses

EU’s $5B fine looks to wrestle away some of Google’s control of data economy, could present opportunities in identity space – One World Identity

July 18, 2018

Google’s dominant position in advertising and collection of personally identifiable information is at the heart of the European Union’s new $5 billion fine levied against the search giant, as the EU claims the company has unfairly leveraged its Android platform to maintain control of the mobile search market.

OWI Insight: Google’s continued dominance in the search market is no doubt bolstered by the fact that its Android platform controls the lion’s share of the smartphone space. However, the EU’s assertion that bundling a web browser and search capabilities into Android is anticompetitive is unrealistic — browsing and search are essential to any modern computing experience. In the U.S., the Department of Justice showed the same lack of foresight in the 1990s, when it targeted Microsoft for bundling Internet Explorer in Windows — an argument that has not aged well in the decades since.

Regardless of the legitimacy of the EU’s claims or the fairness of the $5 billion fine levied on Google, the showdown could have serious ramifications for the data economy, the identity space, and online advertising. Google’s massive size makes it an easy target for the EU, but this fine should be watched closely by any company that handles identity data.

If Android were to be modified to make a Google account less crucial — or completely unnecessary — for new smartphone buyers, OWI believes players in the digital identity space could have an opportunity to fill future voids created in ID authentication and federation. The next 90 days before the fine takes effect could quickly present new challenges and/or opportunities for players in the data economy across Europe.

The €4.34 billion fine, announced on Wednesday, would be the largest ever in the history of the European Commission. Google has 90 days to stop its anticompetitive practices, the legislative arm of the EU said, in order to avoid the fine.

The EU asserts that Google has placed three kinds of restrictions on Android device manufacturers that are anticompetitive. Specifically, they see the combination of the following practices by Google and its parent company Alphabet as illegal:

  • Requiring manufacturers to preinstall the Google Search app and Chrome browser for access to the Play Store.
  • Paying some smartphone makers and wireless providers to preinstall the Google Search app on devices.
  • Preventing manufacturers who preinstall Google apps from selling competing devices running alternative versions of Android not approved by Google.

Google defends itself against the EU antitrust fine.

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“Google has used Android as a vehicle to cement the dominance of its search engine,” European Commissioner for Competition Margrethe Vestager said in a statement. “These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules.”

In response, Google disputed the claims made by the EU, as CEO Sundar Pichai argued that Android has “created more choice, not less.” He cited competition with Apple’s iOS, as well as variety among different types of Android devices, as wins for consumers in the smartphone space.

“Today, because of Android, there are more than 24,000 devices, at every price point, from more than 1,300 different brands, including Dutch, Finnish, French, German, Hungarian, Italian, Latvian, Polish, Romanian, Spanish and Swedish phone makers,” Pichai wrote in response.

Google’s dominance in the search space has given the company a wealth of valuable personal information from the majority of users who access the internet. The company leverages that PII to deliver targeted ads that are more effective at generating clicks than competing advertising services.

The fine from the EU comes as lawmakers in the U.S. have also questioned Google regarding collection of detailed location information from Android phones, as well as third-party access to emails in its Gmail service.