EU charges Google with foisting its search and browser on smartphone makers

The commission also charged Google with preventing makers from selling devices running variants or “forks” of its Android operating system, and giving financial incentives to both phone makers and mobile network operators if they agree to preinstall Google Search on their devices.

In its contracts with manufacturers, Google has made the licensing of the Play Store on Android devices conditional on its search application being pre-installed and set as default search service, according to the commission.

The charges in the form of a “statement of objections” addresses a significant source of revenue for the company: the advertising money it earns through these services and applications that figure on most of the smartphones that offer its Android operating system.

Android had an over 66 percent share of the European mobile device market in March, according to StatCounter.  Google generally holds market shares of more than 90 percent in search, licensable  smart mobile operating systems and app stores for Android in each of the markets in the European Economic Area, the commission said.

This is the second set of charges against Google by the commission.  On April 15 last year, it announced a “statement of objections” against the search giant in an investigation into charges that its Internet search in Europe favored its own comparison shopping product.

The commission announced on the same day an investigation into Google’s conduct with regard to the Android operating system that would look, among other things, into whether Google had illegally hindered the development and market access of rival mobile applications or services by requiring or providing incentives to smartphone and tablet manufacturers to exclusively pre-install Google’s own applications or services.

Competition Commissioner Margrethe Vestager on Monday indicated in a speech in Amsterdam that the commission was looking closely at Google’s contracts with phone makers and operators that use the mobile Android operating system.

“Our concern is that, by requiring phone makers and operators to pre-load a set of Google apps, rather than letting them decide for themselves which apps to load, Google might have cut off one of the main ways that new apps can reach customers,” Vestager said.

On Wednesday, Vestager said that rival search engines, mobile operating systems and Web browsers have not been able to compete on their merits but were "artificially" excluded. "This is not good. It is one of my priorities for consumers to enjoy a wide range of mobile and innovative platforms, products and services," she said.

By European Commission rules, a statement of objections is a formal step in its antitrust investigations in which the commission informs the parties concerned in writing of the objections raised against them. The commission said it takes a final decision "only after the parties have exercised their rights of defence."

If found guilty, Google may have to pay up to 10 percent of its annual worldwide revenue in fines, which could go to as high as US$7.5 billion on its last year revenue of close to $75 billion.

"Android has helped foster a remarkable - and, importantly, sustainable - ecosystem, based on open-source software and open innovation," said Kent Walker, Google's general counsel, in a statement. He added that Google looked forward to working with the commission to demonstrate that Android benefited both consumers and competition.