If Google's Android business is really an anticompetitive monopoly, as the U.S. government apparently believes, it's a mighty strange one. After all, Apple -- not Google or Samsung -- makes almost all the profits in the smartphone business. And unlike Apple, Google shares its operating system with other companies, and it controls less than 60 percent of the U.S. market for mobile operating systems.
Ultimately the test of an antitrust case in the United States is whether consumers are hurt by monopolistic practices. Last weekend, Apple sold 13 million units of its new iPhone 6s and 6s Plus smartphones. Can anyone seriously argue that consumers don't have a choice of smartphones or the mobile operating systems that power them?
Yet it appears that the Federal Trade Commission is preparing to make that very argument. Reporting by Bloomberg Business and the New York Times indicates that the agency believes Google uses its Android operating system to dominate competitors as more consumers go mobile, and the agency may launch a formal antitrust investigation.
The potential prosecution is rich in irony.
Google could face punishment because it's more open, not less open, than its rivals. Google makes Android available to all, so it has the burden of treating companies that accept the invitation equally. In that context, Google's imposition of its apps, APIs, and services is considered a monopolistic rigging of the market. Though they thoroughly control what's on their devices, neither Apple nor BlackBerry could ever be accused of that monopolistic rigging -- because neither company provides its technology to third parties.
In other words, it's OK to thoroughly control a platform you don't share, but it's questionable to impose requirements on one that you do.
Talk about a double standard.
Despite the FTC's thinking, there's no U.S. monopoly for Android
Relatively cheap Android phones have given that operating system a huge share of the global market: a little less than 83 percent, compared to iOS's share of almost 14 percent, according to IDC. But in the United States, Android's share was 59.3 percent compared to 38 percent for iOS in the second quarter of this year.
Microsoft, one of the companies complaining about the alleged Android monopoly to regulators in Europe and the United States, had a share of only 2.4 percent in the same period, says IDC. Would Redmond have its panties in a bunch if it hadn't failed to develop and sell a competitive mobile OS?
Based on the number of subscribers using each platform, Android is even less dominant domestically: In terms of actual subscribers (those with active cellular accounts), Android had a share of 51.4 percent, while iOS ranked second with 44.2 percent, according to ComScore.
Consumers who want to buy an Android smartphone have plenty of choices as well. Samsung, LG, HTC, ZTE, Motorola (now part of Chinese giant Lenovo), Alcatel, and others all sell Android phones in the United States, in addition to Google, which resells other makers' devices under its Nexus brand. Amazon.com sells tablets running its own version of Android. But only one company makes the iPhone.
All the diversity means that developers have the freedom to write for a platform or smartphone of their choice. That's not anticompetitive.
You could also argue that Android's openness actually hurts Google, reducing its purported monopolistic practices' effect. Android's diversity can be viewed as fragmentation, which leads to confusion and a less satisfying experience for the consumer. By contrast, the user experience and the apps for Apple and BlackBerry devices are tightly controlled, which arguably benefits users.
Is the FTC saying that Google needs to act more monopolistically to benefit consumers? Obviously not, but, such facts highlight the faulty logic behind the developing case against Android.
There's even a whole separate version of Android called AOSP (Android Open Source Platform). It's the truly open source part of Android, used as the basis of inexpensive smartphones and tablets throughout the world. AOSP is cheaper to use because its services are so basic that it can run on inexpensive hardware better suited for the small incomes of poor countries. And no Google apps or services are forced on devices running AOSP-based versions of Android.
For example, AOSP is the foundation of Amazon.com's Kindle Fire tablet OS and why it offers none of the Google services you'd expect from Android. That's one reason it's a failure -- but Amazon was free to make that choice. If Google were truly a monopoly, that choice would not exist. Fire is not the only example: The OnePlus series uses the AOSP-based Cyanogen version of Android, and the Blackphone uses its own AOP-derived Android version.
Meanwhile, the E.U. goes after Google search
While the United States is looking at Google's possibly anticompetitive Android practices, the European Union is investigating Google's possibly anticompetitive search practices.
The FTC looked hard at Google's position in the search market two years ago but did not bring a charge against Google, although agency staff members had reportedly lobbied for such action. As a result of the investigation, Google agreed to stop "scraping" reviews and other data from rival websites for its own products. The FTC also required Google to allow advertisers to export data to evaluate advertising campaigns independently.
Earlier this year, Europe's antitrust chief challenged Google over its dominance of Internet search. The E.U. has also started its own investigation into Google's Android platform following complaints from a group called FairSearch.org representing Microsoft, Expedia, and Nokia. (Interestingly, Expedia used to be a division of Microsoft, and Microsoft took over Nokia's smartphone business a couple years ago.) It isn't clear to what extent E.U. and U.S. antitrust investigators are cooperating.
FairSearch.org welcomed news of the FTC's Android inquiry, saying Google "has used a range of anticompetitive tactics. The stakes are extremely high, because Google's behavior impacts the entire mobile ecosystem, including map and location services, and app developers."
Despite the fact that Microsoft has failed for years to get its own Bing search engine to succeed against Google, there may be legitimate issues stemming from Google's search monopoly. If so, it is possible that the E.U. can prove that the company's practices truly damage the interests of consumers.
That's a very different matter than the investigation into Android by the FTC, which is really a case of no harm, no foul -- which means there shouldn't be a case.