Electronic copy available at: http://ssrn.com/abstract=2462393

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TorstenKörber,Göttingen*

LET’STALKABOUTANDROID–OBSERVATIONSONCOMPETITIONINTHEFIELDOFMOBILEOPERATINGSYSTEMS

In the past years, several competition authorities have taken a closer look atGoogle’sbusinesspracticesaftercomplaintsfiledbyGoogle’scompetitorsororgani‐sations,whichareaffiliatedtoitscompetitors,likeFairSearch.

InJanuary2013,theUSFederalTradeCommission(FTC)closeditsantitrustinves‐tigationsagainstGooglebywayofasettlementinwhichGooglevoluntarilyagreedtoofferso‐called“vertical”websitesthatfocusonspecificcategoriessuchasshop‐ping or travel to opt out of display of their content on Google’s own vertical ser‐vices.1 However, the FTC Commissioners unanimously dismissed allegations of a“searchbias”.TheFTCalsorejectedcomplaintsthatGooglewastyingproductsille‐gallytoitsAndroidoperatingsystemortyingsuchproductsillegallytoeachother.2

In July2013, theSouthKoreanFairTradeCommission (KFTC), oneof the leadingAsian competition authorities, dropped antitrust investigations against Google,whichhadbeen initiatedupon complaints of twoKorean search engineoperators(NHNandDaum).ThesecompetitorsclaimedthatGoogleabusedadominantposi‐tion in smartphones running Google’s mobile operating system Android in SouthKorea.Google,however,doesnotmanufacturesmartphones,butoffers themobileoperatingsystemAndroidasopensourcecodetooriginalequipmentmanufacturers(OEMs).3Androidcanbeusedbyanythirdpartyfreeofcharge,asmanyOEMsdo.ThecompetitorsaccusedGoogleofexcludingcompetingsearchapplications(apps)from Android smartphones on the basis of its “Mobile Application DistributionAgreements” (MADA)withOEMs like SamsungorHTC. The investigations againstGoogle lastedmore than two years. Finally, theKFTC came to the conclusion thattherewasnoabuse.OEMswhosignedtheMADAunderscoredthattheypreloadedGoogleSearchbecauseof theirownneedsand that they remained free topreload

* Theauthor,Prof.Dr.TorstenKörber,LL.M.(Berkeley),holdstheChairforCivilLaw,Competi‐tionLaw, InsuranceLaw,CorporateLawandRegulationLawat theGeorg‐August‐UniversitätGöttin‐gen,Germany.HeisdirectoroftheGöttingenInstituteforBusinessLawandeditoroftheleadingGer‐mancommentaryonGermanandEuropeancompetition law“Immenga/Mestmäcker”, for furtherde‐tailsseewww.ls‐koerber.de.ThispaperisbaseduponanexpertopinionfundedbyGoogle.Itwasfin‐ishedonJuly4,2014.1 Googlealsovoluntarilyagreedtomakeiteasiertomoveadvertisingcampaignsacrosscom‐petingadplatforms,andnottoseekinjunctionstoblockrivalsfromusingstandardessentialpatentstokeytechnologies.ForacloserlookattherelationshipofSEPandcompetitionlawseeKörber,StandardEssentialPatents,FRANDCommitmentsandCompetitionLaw,2013,ISBN978‐3‐8487‐0429‐3(expertopinionforApple).2 Seehttp://www.ftc.gov/opa/2013/01/google.shtm;http://www.ftc.gov/news‐events/press‐releases/2013/01/google‐agrees‐change‐its‐business‐practices‐resolve‐ftc:"TheFTCalsoconductedanextensiveinvestigationintoallegationsthatGooglebiaseditssearchresultstodisadvantagecertainverti‐calwebsites;and thatGoogle entered intoanticompetitive exclusiveagreements for thedistributionofGoogleSearchonbothdesktopandinthemobilearena.Theagencydecidednottotakeactioninconnec‐tion with these allegations”; http://www.ftc.gov/sites/default/files/attachments/press‐releases/google‐agrees‐change‐its‐business‐practices‐resolve‐ftc‐competition‐concerns‐markets‐devices‐smart/130103googlesearchohlhausenstmt.pdf.3 Seehttps://source.android.com/.

Electronic copy available at: http://ssrn.com/abstract=2462393

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competingsearchorotherapps.Likewise,userscouldeasilydownloadsearchappsorotherapps,andtheycouldeasilychangetherelevantdefaultsettings.InspiteofthehighmarketshareofAndroidphones(basedonsmartphonesales)thecompet‐ingSouthKoreansearchenginesenjoyedastablecombinedmarketshareofabout90% compared to a share ofmerely 10% for Google Search. The South Koreancompetition authority, therefore, concluded that the MADA did not disadvantagecompetingsearchenginesinanyrelevantway.4

Bothissues,theallegationofa“searchbias”5aswellastheallegationofabusivebe‐haviourinconnectionwiththeAndroidoperatingsystem(OS),havealsobeenpre‐sented to theEuropeanCommission. TheCommission opened formal proceedingsonthesearch‐relatedcomplaintbyFoundemandothersonNovember30,2010. Incontrast to theUSFTC, theEuropeanCommissionexpressedpreliminarycompeti‐tiveconcernsrelatingtotheplacementofGoogleSearchresults.TheseproceedingsarelikelytobecompletedinthenearfutureasCommissionerAlmuniaandGooglehave agreed on commitments under Article 9 Regulation 1/2003 on February 5,2014.6

However,aftertheEuropeanCommissionhadreceivedanonymouscomplaintscon‐taining similar allegations in 2012,7 the anti‐Google lobbying group FairSearch8openlyfiledanAndroid‐relatedcomplaintagainstGoogleinMarch2013.FairSearchclaimsthatGoogleabuses itsdominantposition in themarket formobileOSby li‐censingAndroid freeof charge inorder tomonopolize “thewholemobilemarket‐place”. It furtheraccusesGoogleof foreclosing competingappdevelopersby tyingthe Google apps and forcing the “GoogleMobile Applications Suite” on OEMs andusers.9 The allegations concerning theMADA closely resemble thosemade in theinvestigations in theUS and in SouthKorea inwhichUS FTC andKFTC expresslyrejectedverysimilarcomplaintsandclearedGoogleoftheseaccusations.

Nevertheless,theEuropeanCommissionispressedhardtoformallyopenproceed‐ingsagainstGooglewithrespecttoAndroid.Forexample,inapapernamed“SecretTiesinGoogle's"Open"Android”BenEdelman,anassociateprofessorattheHarvardBusiness School who serves as a consultant for various companies that compete4 Decision 2013 Seo‐Gam 1025 (not yet published); seehttp://www.pcworld.idg.com.au/article/521393/_korea_drops_antitrust_investigation_against_google/.EdelmanwhoreferstothiscaseandcarefullyreiteratestheaccusationsagainstGoogle,unfortunatelyomitsthattheseaccusationswererejectedbytheKFTC,seeLeveragingMarketPowerthroughTyingand Bundling: Does Google Behave Anti‐Competitively?, Working Paper, 14‐112, May 12, 2014,http://ssrn.com/abstract=2436940,atpage55.5 Coveringtheseinvestigationse.g.Körber,GoogleimFokusdesKartellrechts,WRP2012,761(in German) and Körber, Internet search engines and competition law, JIPLAP 2014, 517 =http://jiplp.oxfordjournals.org/cgi/reprint/jpu056?ijkey=aejmlUzxPjmgThk&keytype=ref.6 COMM., 5. 2. 2014, Case COMP/C‐3/39.740 – Foundem and others; http://europa.eu/ rap‐id/press‐release_IP‐14‐116_en.htm; see also Körber, Internet search engines and competition law,JIPLAP2014,517(linkinFn.5above).7 Compare http://www.reuters.com/article/2012/05/21/us‐eu‐google‐idUSBRE84K0GJ20120521.8 FairSearchrepresentsagroupof17specializedsearchandtechnologycompanies,ofwhichonlyMicrosoft/NokiaactuallycompeteswithGoogle in the fieldofmobileOS.Therefore, somecom‐mentators have named FairSearch a “Trojan Horse” of Microsoft, see e.g. http://www. computer‐world.com/s/article/9238267/Microsoft_not_fooling_anyone_by_using_FairSearch_front_in_antitrust_complaint_against_Google.9 See https://www.fairsearch.org/mobile/fairsearch‐announces‐complaint‐in‐eu‐on‐googles‐anti‐competitive‐mobile‐strategy/.

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with Google, presents outtakes from aMADA‐document. Focussing on contractualrequirements that obligeOEMs to preinstall awhole suite of apps if theywant topreinstallsomeGoogleapps likePlayorMaps,EdelmanclaimsthatAndroid isnotreally“opensource”andthatGooglebyimposingtheseobligationsonOEMsharmscompetitors, competition and consumers alike.10 Aswewill see, this is not only aquiteone‐sidedpointofview,butalsoarathermisleadingone.

In thecourseof thispaper, Iwill takeacloser lookat theFairSearchallegations. IwilldosobasedonEUcompetitionlawandunderspecialconsiderationoftheEu‐ropeanCommission’sMicrosofttyingcases,which(only)atthefirstglanceseemtocoversimilarissues.However,theargumentsputforwardinthispaperarevalidfortheUSdebateaswellbecausethescopeoftheprovisionsagainsttheabuseofpower(Article102TFEUinEurope,Section2ShermanActintheUS)isverysimilar,eventhoughtheirwordingisdifferentandtheEuropeanCommissionsometimestakesasomewhat stricter position when applying competition law than DoJ, FTC or UScourts.

10 Seehttp://www.benedelman.org/news/021314‐1.html(Feb13,2014).

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A.EconomicandLegalBackground

I.Google’sBusinessModel

Thetraditionalbusinessmodelofthesoftwareindustryistolicensesoftwareforaone‐timefeeorbasedonasubscriptionmodel.However,thisisnottheonlywaytodrawrevenue.Otherundertakingsoffergoodsorservicesatazeroprice,i.e.withoutcharging the consumers a direct fee (e.g. free newspapers, free TV services, freecreditcardservices).Asthereis“nofreelunchinthebusinessworld”,theseunder‐takingsmust seek their remuneration elsewhere. Zero pricing is possiblewithoutlosing money because these undertakings do not operate on traditional bilateralmarkets,butontwo‐ormultisidedmarketsinwhichtheyfacetwogroupsofbusi‐nesspartners.Thereisonegroupthatdeterminesthedemand(usuallytheconsum‐ers) and another group that indirectly pays the consideration (e.g. advertisers).Suppliersof freenewspapersor freeTVservices, forexample, receive their remu‐nerationfromadvertiserswhopayafeethatiscalculatedaccordingtothenumberof readersorviewers. In thedigital economyof the internet, “free”11 services thatareofferedintwo‐ormulti‐sidedenvironmentsarenottheexception,buttherule.ConsumercommunicationsserviceslikeSkype,12eMailserviceslikeOutlook.comorGmail aswell as search engine services like Bing or Google Search are just someprominentexamples.

WhileGoogle’scompetitorsmaketheirmoneyprimarilybythesaleofdevices(Ap‐ple, RIM) or commercial licensing (Microsoft),13 Google offers free services to theconsumers(likeSearch,MapsorYouTube),butdrawsrevenueprimarilyfrombusi‐nesspartnersontheothersideof themarket for(regularlysearchrelated)onlineadvertising or brokering online advertising.14 In the context of Google’s businessmodel,GoogleSearchandspecialisedGoogleservicesorappslikeMapsorYouTubearetoolstoattracttheattentionoftheconsumers,andthereby,drawrevenuefromtheadvertisingclients.Inordertomaintainandincreaseattentionontheconsumersideofthemarket–andtherebysecureprofitsontheadvertisingside–itisessen‐tial forGoogle tocreatea largecustomerbase (like it isessential foraTVserviceprovider toattractasmanyviewersaspossible).By licensingAndroidandGoogleapps for free, Googlemakes it possible for devicemanufacturers to offerAndroiddevicesatlowerprices.Thisgivesmorepeopleaccesstomobiledevices.Themorepeopleownmobiledevices,themoreusetheinternetandhaveachancetochooseGoogle'ssearchandotherservices.Moreuseofthoseservicesmeansmoreadvertis‐ing revenue.Google’sbusinessbehaviour insofar resembles thebusinessmodelofsuppliersoffreeTVservicesorfreeadvertisingnewspaperservicesthatalsorelyonzeropricing.Obviously, zeropricing to the consumers is a feasible andwidely ac‐ceptedwaytoachievethisbusinessobjective.ThereforeinGoogle/MMI,theEurope‐

11 Itcouldbearguedthattheconsumerspayanon‐monetarypriceintheformofpersonaldata.12 Seee.g.COMM.,7.10.2011,COMP/M.6281–Microsoft/Skype,atparagraph75.13 Seehttp://bgr.com/2014/02/06/apple‐google‐microsoft‐revenue‐sources/.14 Thisdescription issimplified.Google’sbusinessmodel is in factmorecomplexanddiverse.Googledrawsrevenuenotonlyfromsearch,butfromseveralothersources(e.g.thesaleofapporin‐appadvertising, seee.g.http://www.google.de/ads/admob/).According toCOMM.,13.2.2012,CaseCOMP/M.6381–Google/MMI,atparagraph88,in2010,Googlederivedapproximately96%ofitsrev‐enuefromonlineadvertising.

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anCommission considered “ithighly likely thatGooglewillcontinue toensure thatAndroidisdistributedaswidelyaspossibleinordertomaximisetheadoptionofGoog‐le'smobile search and advertising services and therebyGoogle'smobile search andadvertisingrevenues”.15

II.ContractualFrameworkoftheAndroidMobileOperatingSystem

1.AndroidLicenseAgreement

AndroidisanopensourcemobileOSwhichisbasedonaLinuxkernel.Itisprimarilydesignedforsmartphonesandtabletcomputers.AndroidwasinitiallydevelopedbyAndroid, Inc.,acompanythatGoogleacquired in2005.Google introducedthefirstversionofitsAndroidOStothemarketin2007.16GoogleoffersAndroidtoOEMsonaroyalty‐freebasis.Thelicenseesarefreetodownload,distributeandevenmodifytheAndroidcodeastheylike.17OEMscancreatemobiledevicesthatrun“pure”An‐droid (comparably to Google’s own Nexus smartphones and tablets) or they canapply their ownuser interfaces (UI) and therebyhidemost of the underlyingAn‐droidsystem(e.g.Samsung’s“TouchWiz”orHTC’s“Sense”).OEMsmakeampleuseofthisoption.18Furthermore,OEMscanchoosewhetherto installAndroidwithorwithout preloading Google apps. Google apps like the Google Maps app or theYouTubeapparenotpartof theAndroidOS,neither technicallynorcontractually.GooglelicensesthemseparatelyfromtheAndroidOS.19Makinguseofthisfreedomofchoice,Amazon,NokiaandotherOEMsdecidedtocreatemobiledevicesthatareoverallcompatiblewithAndroidapplications(bothfromGoogleandotherappde‐velopers), but come without Google apps, i.e. Amazon Fire devices, Nokia Xsmartphones or CyanogenMod smartphones,20which run “forked” versions of An‐droid.TheAndroidlicenseevenallowsthecreationofforkedversionslikeNookOS(byBarnes&Noble)orYiOS(byBaidu),whichmaynotbefullyAndroidcompatible.

AlthoughGoogledoesnotchargeanylicensefees,AndroidisnotanentirelyfreeOSduetocertainhardware‐relatednon‐freedriverlibrariesforwhichthepatenthold‐ers chargeOEMs royalties.21 Likewise,Microsoft claims to holdpatents on certainAndroidtechnologies22andthereforehasnegotiatedpatentlicenseagreementswithsomeAndroidOEMsthatcoverabout50%oftheAndroiddevices.23IntheUS,Mi‐

15 COMM.,13.2.2012,CaseCOMP/M.6381–Google/MMI,atparagraph93.16 Seehttp://en.wikipedia.org/wiki/Android_%28operating_system%29.17 Android is primarily licensed under an Apache 2.0 open‐source license; see COMM., 13. 2.2012,CaseCOMP/M.6381–Google/MMI,atparagraph18.18 Forexample,Samsung’sTouchWizclearlydominateshidingmostoftheunderlyingAndroid,andthe180pagemanualtotheSamsungNote3smartphonementions“Android”onlyfivetimes,andalwaysaspartoftheexpression“AndroidBeam”.19 Seehttp://source.android.com/faqs.html#why‐is‐google‐in‐charge‐of‐android.20 Seehttp://wiki.cyanogenmod.org.21 See http://www.theguardian.com/technology/2011/sep/19/android‐free‐software‐stallmanand,clarifying,http://stallman.org/to‐4chan.html.22 A list of these patentswas revealed in the course of Chinese antitrust proceedings againstMicrosoftseehttp://images.mofcom.gov.cn/pep/201404/20140408143159274.docx(patentlist)andhttp://www.theverge.com/2014/6/16/5813710/microsoft‐android‐patents‐list(report).23 See http://www.zdnet.com/microsofts‐most‐profitable‐mobile‐operating‐system‐android‐7000015094/ and http://arstechnica.com/information‐technology/2011/10/microsoft‐collects‐license‐fees‐on‐50‐of‐android‐devices‐tells‐google‐to‐wake‐up/.

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crosoftsuedBarnes&NobleforallegedpatentviolationsresultingfromtheuseofAndroidinitsNooktablets.Barnes&Noble,inturn,askedtheDepartmentofJusticeto take action against Microsoft in 2011. Barnes & Noble underscored that "Mi‐crosoft'swillingnesstobullysmallplayerswithexpensivelitigationraisesasubstantialbarrier to entry" because only big companies can afford to pay the license fees.24Google,instarkcontrasttoMicrosoft,hasneveraskedfororreceivedanyconsidera‐tionforlicensingAndroidsinceithasreleasedthefirstversionofAndroidin2007.Asdescribedabove,chargingafeeforAndroidOSorGoogleappswouldbecontrarytoGoogle’sbusinessmodel.

TheprovidersofothermobileOSeitherfollowanopensourcebusinessmodelsimi‐lar toGoogle (e.g.Symbian,Ubuntu,FirefoxOS, JollaSailfishOS,TizenOS)or theylicensetheirOStoOEMsforaroyaltyfee(MicrosoftWindowsPhoneandWindows8for tablets).25 Alternatively, they are vertically integrated anduse theirmobileOSexclusivelyfortheirowndevices,notlicensingittoanybodyelse(AppleiOS,Black‐BerryOS).26

2.OptionalContractsofferedtoOEMsinAdditiontotheAndroidLicense

In addition to the Android license agreement, Google offers various other docu‐ments, tools and agreements to OEMs. OEMs arenot obliged to sign these agree‐ments. Unsubstantiated accusations according to which Google “forces” OEMs tosigntheseagreements inordertogetanAndroidlicense,27areplainly false. Inthecontextofthispaper,threedocumentsthatbuilduponeachotherareofspecialin‐terest:CDD,AFA,andMADA.

These documentsmust be analysed in the context of competition among “mobileecosystems”likeAndroid,iOS,BlackBerryorWindowsPhoneaswellasagainstthebackgroundofAndroidfragmentation.ComparedtoothermobileOS,Androidoffersan unparalleled freedom to OEMs, app developers and users alike. This freedom,however,hasadownsideintheformofAndroidfragmentation(i.e.theexistenceofseveralversionsofAndroidcanimpedeaconsistentuserexperienceandcreatein‐teroperabilityproblems).Fragmentationisaproblemforappdeveloperswhowanttomakesurethattheirappsrunflawlesslyandsecurelyonasmanydevicesaspos‐

24 See http://www.theverge.com/2011/11/8/2548577/barnes‐noble‐justice‐department‐microsoft‐patent‐lawsuits. In the end, the conflictwas settled.Microsoft invested300millionUS$ inBarnes&Noble’sdigitalandcollege textbooksubsidiary,andBarnes&Noble, in turn,agreed topaylicense fees to Microsoft, see http://blogs.reuters.com/alison‐frankel/2012/05/01/who‐won‐microsoft‐v‐barnes‐noble‐patent‐litigation/.25 In April 2014, Microsoft announced plans to licenseWindows Phone royalty‐free to somemakers of smartphones and small tablets for consumers, http://www.reuters.com/article/2014/04/02/us‐microsoft‐windows‐idUSBREA311OX20140402.26 See http://chillingcompetition.com/2013/09/05/some‐thoughts‐on‐the‐new‐anti‐google‐android‐complaint‐post‐13/.RIM, likeApple,doesnotyet license itsBlackBerryOS toothermakers.However,RIMCEOThorstenHeinsstatedinaninterviewthatlicensingwas“conceivable”ifBlackBerryOS showed a sufficiently large potential as a mobile platform, see http://techcrunch.com/2013/01/21/rim‐ceo‐says‐licensing‐blackberry‐10‐is‐conceivable/.27 In thisveinEdelman (footnote4above), atpage55.Edelman’s only “evidence” is twocom‐plaintsagainstGooglebycompetitors.Buttheseclaimswerebothrejectedbythecompetentcourt(seeSkyhookWireless, Inc.v,Google, Inc.MACivilActionNo.2010‐03652‐BLS1)andbytheSouthKoreanFTC(NHNandDaumvs.Google, footnote4above),andthereforeactuallyrathergiveevidencetotheoppositeandunderscorethatEdelmaniswrong.

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sible.Fragmentationalsoisaproblemforuserswhowanttomakesurethatalltheirfavouriteappsrunonall theirAndroiddevicesandwhowanttobeable toswitchAndroiddevicesforanewermodelwithouthavingtoworryaboutincompatibilitiesandswitchingcosts.While fragmentation isnotaproblemwithregard to iOS(be‐causeAppleensuresneartoabsoluteuniformity)orwithregardtoWindowsPhone(becauseMicrosoftensuresaveryhighdegreeofuniformity),itismoreproblematicwithAndroidbecauseGoogle, incontrast,givesAndroid licensees fargreater free‐domwithregardtousingandevenmodifyingtheAndroidcode,tocustomizetheUIand to installapps.Tobalance thissituation in the interestofappdevelopers,butalsotothebenefitofconsumerswhowantdevicesthatarecompatiblewithasmanyAndroidappsaspossible,Google followsanapproachthatgivesOEMsandmobilenetworkoperators(MNOs)thefreedom,tooptformoreconformityandinteropera‐bilityinseveralsteps.Step1istheoptiontofollowtheCDDrequirementsdefacto.Step2istocommittofollowtheCDDcontractuallybysigningtheAFA.Step3istoofferusersanevenmorecomprehensive“Googleexperience”bysigningtheMADAandpreinstallingtheGoogleMobileApplicationsSuite(GMS).

a)AndroidCompatibilityDefinitionDocument(CDD)

TheCDD isapubliclyavailabledocument thatenumerates thesoftwareandhard‐warerequirementsofanAndroidcompatibledevice.GoogleissuesanewCDDver‐sionwitheachnewversionofAndroid.28Bysettingcertainstandards,theCDDguar‐anteesinteroperabilitythroughouttheAndroidecosystem,inparticulartheproperfunctioningofAndroidappsthatrelyoncertain interfacesandbehaviourssuchastheApplicationProgrammingInterfaces(APIs)implementedinAndroid.Forexam‐ple,clickingonanemailaddresswillopenanemailprogram(so‐called“intents”).29Forthispurpose,theCCDalsoincludesalistofcoreapplicationsthatmustbepre‐sent on any Android compatible device (Desk Clock, Browser, Calendar, Contacts,Gallery, GlobalSearch, Launcher, Music and Settings). The CDD thereby creates astable platform for applications, both from Google and other Android based appsdevelopers.WhiletheCDDensuresinteroperability,itdoesnotprecludeOEMsfromforkingAndroid.TheCDDexpresslypermitsOEMstoreplaceeventheAndroidcoreapplications with alternative apps as long as they fulfil the basic interoperabilityrequirements.Also, theOEMsarecompletely free tochoosewhich internetsearchservicetheywanttouseandsetasadefault.TheCDDdoesnotrequiretheinstalla‐tionofanyGMSappslikePlay,MapsorYouTube.OEMscanself‐certifytheirdevicesbydownloadingandrunningtheGoogle“CompatibilityTestSuite”(CTS),afreeandpubliclyavailablesuiteofcompatibilitytestingprograms.30

28 See http://static.googleusercontent.com/media/source.android.com/de//compatibility/android‐cdd.pdf.29 See http://static.googleusercontent.com/media/source.android.com/de//compatibility/4.4/android‐4.4‐cdd.pdf.“Anintentallowsyoutostartanactivityinanotherappbydescribingasimpleac‐tionyou'dliketoperform(suchas"viewamap"or"takeapicture")inanIntentobject.Thistypeofintentiscalledanimplicitintentbecauseitdoesnotspecifytheappcomponenttostart,butinsteadspecifiesanaction and provides some data with which to perform the action”, quote fromhttp://developer.android.com/guide/components/intents‐filters.html.30 Seehttp://source.android.com/compatibility/cts‐intro.html.

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b)Anti‐FragmentationAgreement(AFA)

OEMsarefreetosign(ornottosign)theAnti‐FragmentationAgreement(AFA).Bysigning theAFAanOEMpledges tobuild onlydevices that fulfil theCDD require‐mentsandnottotakeanyactionsthatmaycauseorresult inthefragmentationofAndroid.31WhileallOEMsarefreetousetheword“Android”inadescriptivefash‐ionwithoutsigningtheAFA,onlyOEMswhocommittotheAFAandfulfiltheCDDrequirementsmaydeclaretheirdevicestobe“AndroidCompatibleDevices”andusethe Android compatibility trademark. This offers a minimum protection to userswhorelyonthecompatibilityofdevicesthatcarrythistrademark.Atthesametime,theAFAreducesAndroidfragmentationtothebenefitofconsumersandappdevel‐opers. The AFA, therefore, is obviously pro‐competitive.32While signing AFA is acondition precedent for concluding a Mobile Application Distribution Agreement(MADA) with Google and, thereby, for preinstalling GMS apps like Play, Maps orYouTube, neither CDD nor AFA require the preinstallation of any Google apps orservices.UnsubstantiatedallegationsclaimingthatGoogle“withholdscertification”ofAndroiddevices,ifOEMsdonotsigntheMADA,33areplainlyfalse.

c)MobileApplicationDistributionAgreement(MADA)

OEMsmayalsosigntheoptionalMobileApplicationsDistributionAgreement(MA‐DA).IftheyopttosigntheMADA,OEMsarelicensedtopreloadtheGMSonaroyal‐ty‐free basis.MADA are negotiatedwith theOEMs individually. They candiffer indetail,butthebasicrequirementsarethesameinallMADA.34Likevirtuallyallindi‐viduallicenseagreements,MADAareconfidential.Confidentialityisacommonbusi‐nesspracticewithregardtosuchagreements.Forexample,theMicrosoftOEMMo‐bileWindowsDistributionAgreementwithBsquarethathasbeenpublishedinthecourseofUSproceedingsstatesthattheOEMs,interalia,“shallkeepconfidential:(a)the termsof thisAgreement, including,without limitation, theRoyaltyRateLists”.35Hence,allegationsbyFairSearchandEdelmanwhoclaimthatMADA‐confidentialitywasaimedat“deceivingthepublic”aremisleading.36

ThematerialprovisionsofGoogle’sMADAmustbeseeninthecontextofcompeti‐tionamong“mobiledeviceecosystems”(Android,iOS,WindowsPhone,BlackBerryandothers).Userswhobuymobiledeviceslikeaconsistent“outofthebox”experi‐ence.Theyexpectamodernsmartphoneortablettocomewithacertainsetoffea‐31 See e.g. http://www.zdnet.com/androids‐fragmentation‐problem‐just‐got‐a‐whole‐lot‐weirder‐and‐bigger‐7000026681/.32 Edelman (footnote4 above, at page60) omits this rationale ofAFA and claims thatGooglewithholds the permission to use theAndroid trademark and logo in order to foreclose competition.However,itisobviouslyjustifiedandinthebestinterestoftheconsumersthatGoogleforbidsmakersofnon‐compatibledevicestofalselyclaimotherwisebyabusingtheAndroidcompatibilitytrademark.33 InthisveinEdelman(footnote4above),atpage61.34 Ifnotindicatedotherwise,“MADA”inthefollowingreferstotheHTC‐MADAof2011towhichEdelman also refers in his papers (see footnotes 4 and 10 above) andwhich he has published onhttp://www.benedelman.org/docs/htc‐mada.pdf.35 SeeSec.10oftheMicrosoftOEMWindowsMobileDistributionAgreementbetweenMicrosoftLicensing,GP,anaffiliateofMicrosoftCorporation,andBsquareCorporation,datedNov1,2009,seehttp://www.sec.gov/Archives/edgar/data/1054721/000119312511070073/dex1019.htm.36 Edelman(footnote10above,andfootnote4above,atpages66and71)unfoldsawhole“con‐spiracytheory”ofsorts,buttheundisputedcontentsoftheMADAandthestatementsthathequotespointinanotherdirectionifreadwithoutprejudice.

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tures and functions. Google’smain competitorsApple,Microsoft andRIMhave al‐waysofferedsuchanexperiencewhileAndroidhasbeenheavilycriticisedforbeingtoofragmented.37TheMADAensuresthatusersgetadevicewithafullsetofapps(theGMS)thatoffera“Googleexperience”similartothe“Appleexperience”offeredbytheiOSdevicesorthe“Microsoftexperience”offeredbyWindowsPhonedevices.MADAinsofardoesnotrestrict,butenables“mobile interecosystemcompetition”.Atthesametime,preinstallingGMSisjustanadditionaloption,whichGoogleoffersintheformofaseparatelicenseaccordingtotheMADAwhileAppleandMicrosoftbothtechnicallyembedcertainappsiniOSorWindowsPhone.Moreoverall(iOS)ormost (Microsoft/Nokia) devices are made and sold by these vertically integratedundertakingsthemselveswhilemostAndroidphonesareofferedbyOEMstowhichGoogleonly licensesAndroidandGMS.MADAisonlyoneoptionamongothers fortheseAndroidOEMs. In contrast toAppleandMicrosoft,Googledoesnotprohibit“forkedversions”ofAndroid.Therefore,(only)theAndroidecosystemoffersmobileintraecosystemcompetitioninadditiontomobileinterecosystemcompetition.An‐droiddevicessubjecttotheMADAofferinga“Googleexperience”competeinteraliawithAmazonFiredeviceswhichofferan“Amazonexperience”andNokiaXdeviceswhichoffera“Nokiaexperience”.

Tomakethis“Googleexperience”andtheintraAndroidcompetitionamongdiffer‐entsuitesofappspossible,OEMswhochoosetopreinstallsomeGoogleappsonacertaindevice(e.g.theappstoreGooglePlay,YouTube,MapsorGmail)accordingtoSec. 3.4 MADA must preload the whole GMS, i.e. all the Google apps defined as“GoogleApplications”inSec.1.11MADA.38ThatmeansOEMscannot“cherry‐pick”.IfOEMsopttosigntheMADA,theymustalsoplacetheGoogleSearchwidget39andtheGooglePlayicononthe“panelimmediatelyadjacenttotheDefaultHomeScreen”,andtheotherGoogleApplications“nomorethanonelevelbelowthePhoneTop”,e.g.in the “Apps” folder or in theGoogle collection (folder)within this folder. Finally,GoogleSearchmustbethedefaultwebsearchengineforthesearchintent.Thisre‐quirement is of a very limited practical relevance. Itmeans that Google Search isinvokedbydefaultifanappusesthesearchfunctionality.However,inpracticethereishardlyanyappthatusesthisspecificintent.ThestandardMADAdoesnotentailanyexclusivityforGoogleSearchnordoesitmandateasearchdefault forthewebbrowser.40Moreover,MADA does not forbid OEMs to install competing apps that

37 See e.g. http://www.zdnet.com/androids‐fragmentation‐problem‐just‐got‐a‐whole‐lot‐weirder‐and‐bigger‐7000026681/.38 Accordingtothe2011HTC‐MADAthese“GoogleApplications”were:Set‐UpWizard,GooglePhone‐Top Search, Gmail, Google Calendar, Google Talk (now: Google Hangouts), YouTube, GoogleMapsforMobile,GoogleStreetView,ContactSync,AndroidMarketClient(now:GooglePlay),GoogleVoiceSearchandNetworkLocationProvider.39 A“widget”isasmallapplicationwithlimitedfunctionalitythatregularlyis linkedtoanappand can be placed directly on the home screen. For example, a Searchwidget offers a field to typesearchrequests;aweatherwidgetshowsaweatherforecastonthehomescreenetc.40 Edelman’s assertion (see footnote 4 above, at page 55), according to which the OEMs areforcedtomakeGoogleSearch“theonlyanddefaultprovidersfortheirrespectivefunctions”iftheywanttoinstallGMSisinaccurate.ThestandardMADAdoesnotimposeanyexclusivity(whichEdelmanad‐mits“inprinciple”atpage58).MADAarenegotiatedbetweenGoogleandOEMsindividuallyandonadevice‐by‐devicebasis.Therefore,theremightbeversionsoftheMADAforcertaindevicesthatincludeexclusivepre‐installationanddefaultrequirements.However,thiswouldbeavariationtothestandardMADAandnotaconditionprecedentforenteringintotheMADAatall.Inotherwords,OEMscangetalicenseforGMSwithoutsubmittingthemselvestoanysearchexclusivity.Moreover,inanycase,noth‐ingpreventsusersfromdownloadingcompetingsearchappsandtochangesearchdefaults.

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weredevelopedbyOEMsorthirdpartiesandplacethemrightnexttotheGMSapps(or inevenbetterpositions).AsOEMscanconcludetheMADAona“devicebyde‐vice”basis, theystay free to install theGMSononephonemodelwhile theyuseadifferentsuiteofappsonanotherdevice.41TheWindowsPhone8.1rulesforsearch,for example, leave OEMs far less freedom. They state that “[b]y default, the onlysearchproviderincludedonthe[Windows]phoneisBing”.42

TosigntheMADAisoptional,butevenifweassumethatthefreedomofchoiceofOEMs is somewhat limited because users expect them to deliver Android phoneswithGMS,aperspectivethatonlyseestherestrictionsimposedbytheMADAisdis‐tortedbecause theMADAdoesonly takeaway freedoms fromAndroidOEMs thatWindowsorWindowsPhoneOEMsneverhadinthefirstplace(andthatdonotexistatall inthe iOSecosystembecauseApplemakesall iOSdevices itself). Inaddition,theMADAmakesitimpossibleforOEMsorMNOstoexclusivelylimituserstotheirownappstores,appsandservicesbycreatingso‐called“walledgardens”(likeAma‐zondoeswithitsFiredevicesforwhichappscanonlybedownloadedthroughAma‐zon’sownappsstore).Inthisrespect,theMADA,asasideeffect,actuallyimprovesconsumer welfare by protecting consumers’ freedom of choice in this respect aswell.

III.RelevantEUCompetitionLawProvisions

FairSearchhasnotyetpublished itscomplaint in full.However,FairSearch’spressreleaseindicatesthatthecomplaintrestsontwopillars.First,ontheallegationthatGoogleabusesapresumed“dominanceinthesmartphoneoperatingsystemmarket”byengaginginapredatorypricingstrategybygivingawayAndroidfreeofcharge;second,ontheassumptionthatGoogleforeclosescompetingappdevelopersbytyingseveralGoogleapplicationstotheGMSonthebasisoftheMADA.43It issafetoas‐sume that the complaint isprimarilyaboutallegedabusesof adominantposition,which according to European competition lawwould be forbidden byArticle 102TFEU.Therefore,thefollowinganalysiswillfocusonthisprovision.

41 Edelman(footnote4above,atpage59)claimstheopposite,buthemisunderstandstheMADAintherespect.WhileOEMscannotsigntheAFAonadevice‐by‐devicebasis,theMADAcanbeconcludedonadevice‐by‐devicebasis.42 Windows Phone 8.1 customization and runtime configuration rules for search of April 24,2014, https://dev.windowsphone.com/en‐US/OEM/docs/Customization/Customizations_for_search.Thisprovisioncontinues,that“[i]fthephone’sbrowserandsearchlanguagearesettoalanguagethatBingsupports,anysearchprovidersspecifiedbytheOEMwillbehiddenfromtheInternetExplorerscreeninSettings,andboththehardwaresearchbuttonandsearchinthebrowserwillalwaysuseBing.Partnerscannotcontrolorchangethisdetermination”.43 See http://www.fairsearcheurope.eu/wp‐content/uploads/2013/04/FairSearch‐Announces‐EU‐Complaint‐on‐Google‐Mobile‐Strategy‐9‐April‐2013.pdf.

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B.CompetitiveAnalysis

I.MarketDefinition

Article102TFEUisonlyapplicabletoundertakingsthatholda“dominantposition”inoneormoremarkets.Therefore,thefirststepofthecompetitiveassessmentofabusinesspracticegenerallyistodefinethemarketsonwhichtheundertakingmightholdsuchaposition.AccordingtotheEuropeanCommission’sNoticeonthedefini‐tionofrelevantmarket,marketdefinition“isatooltoidentifyanddefinethebounda‐riesofcompetitionbetweenfirms.…Themainpurposeofmarketdefinitionistoidenti‐fyinasystematicwaythecompetitiveconstraintsthattheundertakingsinvolvedface.Theobjectiveofdefiningamarketinbothitsproductandgeographicdimensionistoidentifythoseactualcompetitorsoftheundertakingsinvolvedthatarecapableofcon‐strainingthoseundertakings'behaviourandofpreventingthem frombehaving inde‐pendentlyofeffectivecompetitivepressure”.44

Adetailedmarketdefinitionwouldgobeyond thescopeof thispaper.However,asummaryanalysismightsufficeatthispoint.Whileitstandstoreasonthatthegeo‐graphic scope of all markets to which the FairSearch complaint refers is world‐wide,45definingtherelevantproductmarketisfarmoreproblematic.Inparticular,anymarketdefinitionmust take intoaccount thatGoogleandmostof itscompeti‐tors operate to a large degree in two‐ andmultisided environments46 while therulesformarketdefinitionmostlyrefertotraditionalbilateralmarkets.Thismakesmarket definition not only farmore complex, but also increases the risk of errorconsiderably.47

1.MarketforOperatingSystemsforMobileDevices(MarketforMobileOS)

Therelevantmarketwithregardtothefirstallegation(predatorypricing)couldbedefinedas“themarketfortheprovisionofOSsforsmartmobiledevices”.TheEurope‐anCommissionbaseditsdecisionintheGoogle/MMImergercaseonthisdefinition,butultimatelylefttheexactscopeofthismarketopen.Inparticular,theCommissionexpresslydidnotdecidewhethermobileOSforsmartphonesandtabletsbelongtothe same product market. The Commission also did not address the question ofwhethertheaforementioneddefinitiononlyappliestolicensablemobileOSortoallmobileOS.48However, inamorerecentanswertotheEuropeanParliamentwhichaskedwhetherAppleholds adominantposition on themarket formobileOS, theCommission expressed the opinion that “Apple does not seem to hold a dominant

44 OJ1997C372/5(9.12.1997),atparagraph2.45 CompareCOMM.,13.2.2012,CaseCOMP/M.6381–Google/MMI, atparagraphs31and fol‐lowing.46 Seepage3andfollowing.47 Against thisbackground, themoreefficientproceduralapproachmightbe toskip theques‐tionsofmarketdefinitionanddominanceand,instead,firstanalyseiftherewasanabuseifGoogleheldadominantposition.Amoredetailedanalysisofmarketdefinitionanddominancewouldthenonlybenecessaryifsuchanabusewasfound.Thisapproachmightspareallsidescostlyandtime‐consuminginvestigations. Furthermore, incentives to abuse competition law in order to raise the rival’s costswouldbereduced.48 COMM.,13.2.2012,CaseCOMP/M.6381–Google/MMI,atparagraphs24and30.

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positionon themarket formobileoperating systems”.49Hence, the Commission re‐jected the notion that there are separate markets licensable mobile OS (like An‐droid) andnon‐licensablemobileOS (like iOS), but considered an overall productmarketthatincludesallmobileOS.Takingintoaccountthepurposeofmarketdefi‐nition quoted above (“identify… the competitive constraints that the undertakingsinvolved face”), thebetterarguments indeedindicatethatawidemarketdefinitionincludingOSforsmartphonesandtabletsaswellaslicensableand(notyet)licensa‐bleOSismandated.

AsmostmobileOSaredesignedforbothsmartphonesandtablets(likeiOSandAn‐droid),itwouldseemartificialandatoddswiththegrowingconvergencebetweenmobiledevices todrawa linebetween smartphoneOS and tabletOS justbecausefew suppliers (especiallyMicrosoft) decided to offer separate versionsof theirOSfor smartphones and tablets. Likewise, the European Commission observed in itsGoogle/MMIdecisionthat“themajorityofrespondentsconsideredthatmobileOSsforsmartphonesandtabletsshouldbelongtothesamemarketsincetheyhaveverysimi‐lar functionality and there appears to be significant convergence between the twotypesofdevices”.50

OnlylicensableOSareofferedtolicenseseekerswhilenon‐licensableOS,bydefini‐tion,arenot.Thismay,atfirstsight,suggestanarrowmarketdefinitioninthisre‐spect.However, adistinctionbetween licensable andnon‐licensableOSwouldnottakeintoaccountthattheundertakingholdingtheintellectualpropertyrightsforanOScan,atanytime,decidetomakeaformerlynon‐licensableOSlicensable.51Evenmoreimportantly,anarrowdefinitionwouldnotproperly“identify…thecompeti‐tive constraints that the undertakings involved face” thereby missing the wholepointofthemarketdefinitionprocess.ItisobviousthatAndroidcompetesnotonlywithotherlicensablemobileOSlikeWindowsPhone,butprimarilywithApple’siOSfor end customers. “Platform competition” or “ecosystem competition” betweenAndroidandiOSactuallyisthemaincompetitiveforcethatdrivesinnovationonthemarket for mobile OS, apps, devices and services. Therefore, not to consider iOS,merelybecauseAppleisverticallyintegratedandproducesalldevicesrunningiOSitself, would be misleading. At least, the supply of not (or not yet) licensable OSwould have to be considered as substitution competition when assessing domi‐nance.

2.MarketsforMobileAppsandRelatedServices

Withrespecttothesecondallegation(foreclosureby“tying”GoogleapplicationstotheGMS), severalmarketsmay become relevant.Market definitionwould requiredefiningmarketsforthetyingproducts(e.g.individualapps,suitesofappsorrelat‐edservices)aswellasmarkets for the tiedproducts (e.g.otherapps thatarepre‐sumably forcedontoOEMsandusers).This is a very complicated task sincemost

49 SeeAnswergivenbyMrAlmuniaonbehalfoftheCommissiontotheEPonFebruary10,2014,http://www.europarl.europa.eu/sides/getAllAnswers.do?reference=E‐2013‐013770&language=EN.50 COMM.,13.2.2012,CaseCOMP/M.6381–Google/MMI,atparagraph28.51 See footnote25 abovewith respect toBlackBerryOS. Compare footnote23 abovewith re‐specttoWindowsPhone.

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mobileserviceslikeinternetsearch,emailormapnavigationdonotrequireaspecif‐ic app. Users can alternatively access them as mobile websites through any webbrowser.Theboundariesbetweenappsandservicesareblurredevenmoreduetothefactthatsome“nativeapps”offergenuineofflinefunctionalitywhileotherappsare littlemore thanhyperlinks tomobilewebsites.Furthermore, thenewHTLM5‐stardardmakes it even easier to bridge the gap between native apps andmobilewebsitesbycreating“hybridapps”thatcombinenativeappfunctionswithintegrat‐edwebsites. In short, even if certainappsarenotpreinstalledonamobiledevice,thisdoesneithermeanthattheseappsarepermanentlyexcludedfromthedevice,nor that the related services cannot be used. Finally, it is not clear whether theproductmarketsthatarerelevantinthecontextoftheMADAaremarketsforindi‐vidualappsorrathermarketsforsuitesofappsthatofferacertainuserexperience(e.g.a“Googleexperience”oran“Amazonexperience”).

II.Dominance

Competitiveassessmentbecomesevenmorecomplicatedwithregard to theques‐tion of dominance. In its Guidance on the Commission’s enforcement priorities inapplyingArticle82of theECTreaty toabusiveexclusionary conductbydominantundertakings, the European Commission defines dominance “as a position of eco‐nomicstrengthenjoyedbyanundertaking,whichenablesittopreventeffectivecom‐petitionbeingmaintainedonarelevantmarket,byaffordingitthepowertobehavetoanappreciableextentindependentlyofitscompetitors,itscustomersandultimatelyofconsumers.…Dominanceentailsthatthesecompetitiveconstraintsarenotsufficientlyeffectiveandhencethattheundertakinginquestionenjoyssubstantialmarketpoweroveraperiodoftime.Thismeansthattheundertaking'sdecisionsarelargelyinsensi‐tivetotheactionsandreactionsofcompetitors,customersand,ultimately,consumers.…Ingeneral,adominantpositionderivesfromacombinationofseveralfactorswhich,takenseparately,arenotnecessarilydeterminative.”52

1.MarketforOperatingSystemsforMobileDevices

a)MarketShares

TheEuropeanCommission’sanalysisusuallystartswithalookatthemarketshares,which, however, only serve as a first and limited indication of competitivestrength.53TakingafirstsuperficiallookatthemarketsharesinthefieldofmobileOS,a“snapshot”ofthemarketplacesattheendof2013reportsashareforAndroidthatcouldbeassociatedwithdominance.5478.4%ofthesmartphonessoldworld‐widewererunningAndroid(iOS:15.6%,WindowsPhone:3.2%,BlackBerryOS:1.9%,others:0.9%).55Theworldwidetabletsalespointinthesamedirection:61.9%

52 COMM., Guidance, OJ 2009 C 45/7 (24. 2. 2009), at paragraph 10 (in the following. “Guid‐ance”).Article82ECT=Article102TFEU.53 COMM., Guidance, at paragraph 13; see also COMM., 7. 10. 2011, COMP/M.6281 – Mi‐crosoft/Skype,atparagraph78.54 Inthisveine.g.Edelman(footnote4above),atpage55.55 Seehttp://www.gartner.com/newsroom/id/2665715,Table3.

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of the tabletswere runningAndroid (iOS:36.0%,WindowsPhone:2.1%,others:less than0.1%).56Themarketshares inEuropediffer toacertaindegree,butnotverymuch. In January2014,Androidreachedamarketshareof68.5% inEurope(iOS:19.0%,WindowsPhone10.1%).57

However, thehighmarketsharesofAndroiddevicesarenotasconclusiveas theyseematfirstglancewhenitcomestoassessingGoogle’smarketposition.RelyingonthesalesfigureswouldnottakeintoaccountthatGoogle(otherthanAppleorRIM)doesnotproduceAndroiddevices.Androiddevicesaremanufacturedbyindepend‐ent OEMs like Samsung, HTC or LG, andmost Android devices are sold by theseOEMsorbyMNOs.Theseundertakingscontrolthedevices’pricesand,therefore,themarketsharesshouldbeattributed to themandnot toGoogle,whichonlyplaysaminorroleonthesalesmarketsasvendorof itsown“Nexus”devices.58Moreover,thesesalesfiguresdonotdifferentiatebetweendeviceswithGMSandAndroidde‐viceswithoutGMS(likeAmazonFiresmartphonesandtablets),andtheyonlyofferashort‐term impressionofmarkets,whicharehighlydynamicand inwhichmarketsharesshiftrapidly.59

Inanycase,relyingonhardwaresalesfiguresalonemightpaintafalsepicturebe‐cause themere number of devices is not the only factor that determine user en‐gagementand, thereby, the incentive forappdevelopersandservicesproviders tocompete.BasedonanestimatebyABIresearch,usersdownloadedabout56billionappsin2013.WhileAndroidsmartphonesaccountedfor58%oftheappdownloads(iOS: 33%,WindowsPhone: less than 4%, BlackBerryOS: 3%), Android tablets(excludingAmazon’sKindleFire)accountedforonly17%oftheappdownloadsinthisyear(iOS:75%,KindleFire:4%,WindowsPhone:2%).60Moreover,whilethetotalnumberof appdownloadsviaGooglePlayexceeded the totalnumberof appdownloads fromApple’s iOSAppStore, the total revenuedrawn fromGooglePlaywas less than half of Apple’s revenue from iOS App Store in the third quarter of2013.61Obviously, theaverage iOSuserspendsconsiderablymoremoneyonappsthantheaverageAndroiduser.Furthermore, themoretimeusersspendbrowsingtheweb,themoreopportunitiesarisetopresentadvertisements,andiOSuserscol‐lectively spendmore time on theweb than Android users. In February 2014, the

56 See http://techcrunch.com/2014/03/03/gartner‐195m‐tablets‐sold‐in‐2013‐android‐grabs‐top‐spot‐from‐ipad‐with‐62‐share/(referringtoGartner).57 Seehttp://www.kantarworldpanel.com/dwl.php?sn=news_downloads&id=428.58 Seehttp://www.computerworld.com/s/article/9244477/Google_s_Nexus_lineup_may_not_sell_well_but_still_challenges_Android_makers.GooglealsoownedtheOEMMotorolabetween2012and2014,but itsoldMotorola toLenovo in2014. InCOMM.,13.2.2012,CaseCOMP/M.6381–Google/MMI,atpara‐graphs64 and following, theCommissiondidnot share this argument and – for thepurpose of thismergerinvestigation–attributedthemarketsharecorrespondingtoAndroidtoGoogle.59 CompareGC,11.12.2013,caseT‐79/12,atparagraphs69andfollowing–CiscoSystemsandMessagenet/Commission: “In a dynamic context, highmarket shares are not necessarily indicative ofmarketpower“.60 See https://www.abiresearch.com/press/android‐will‐account‐for‐58‐of‐smartphone‐app‐down(inthecontextofthispapertheword“billion”means“1000million”).61 Seehttp://blog.appannie.com/app‐annie‐index‐market‐q3‐2013/#sthash.bTuRqNK9.dpuf.

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mobile browser share of AndroidBrowser andGoogle Chrome combined reached35.93%,whiletheshareofiOSSafariwas53.52%.62

Although the overall picture is not as conclusive as themere device sales figuressuggest,itbecomesquiteclearthatGoogleandApplearemarketleadersinallthreerespects (device sales, app revenue, web browsing time). This however, does notmeanthatGoogleisdominantaccordingtoArticle102TFEU.Marketsharesareonlya first indication.What really matters is whether “the undertaking's decisions arelargely insensitive to the actions and reactions of competitors, customers and, ulti‐mately,consumers”.63

b)MarketDynamicsandOverallCompetitiveStructureoftheMarket

aa)MarketDynamics

Lookingat thedynamicsof themobileOSmarkets, two factorsdeservespecialat‐tention.

First,historicaldevelopmentinmanyfieldsofthedigitaleconomysuggeststhathighmarket shares are seldomstable over an extendedperiodof time.Only five yearsago,MySpacedominatedthemarketforsocialnetworkswithmorethan250millionsubscribers; today MySpace is irrelevant.64 Facebook took the lead, but might al‐readybeheadingsouthduetoshrinkingpatronagebyyoungerinternetusers.65Thesame dynamics manifest themselves in the market for mobile OS: As comScorepointedout:“In2005,themarketwasdominatedbyPalm,SymbianandBlackBerry.However,by the following yearall threehad ceded control toMicrosoftas thenewmarketshare leader.2008‐2010sawBlackBerrystageacomebacktoassumethe#1position before eventually giving way to the upstart Android platform in 2011”.66WhilethesourcesdifferwithrespecttowhichmobileOSwasmarketleaderin2009and2010(othersourcesstatethatitwasSymbian67oriOS68)allsourcesagreethatAndroidtooktheleadonlythreeyearsagowithrespecttoworldwidesmartphonesales(in2011)69andoneyearagowithrespecttotabletsales(in2013).70Moreover,whenAndroidenteredthemarketformobileOS,Symbian,BlackBerryandiOSwere

62 See http://netmarketshare.com/. See also http://dotmobi.com/content/apple‐devices‐dominate‐global‐web‐browsing‐while‐android‐gains‐ground‐0.63 COMM., Guidance, at paragraph 13; see also COMM., 7. 10. 2011, COMP/M.6281 – Mi‐crosoft/Skype,atparagraph78.64 Seehttp://en.wikipedia.org/wiki/Myspace.65 See http://www.dailymail.co.uk/sciencetech/article‐2544200/Facebook‐like‐infectious‐disease‐claim‐researchers‐say‐peaked‐lose‐80‐percent‐users‐YEAR.html vs.http://techland.time.com/2014/01/23/facebook‐losing‐users/.66 See https://www.comscore.com/ger/Insights/Press_Releases/2013/2/comScore_Releases_the_2013_Mobile_Future_in_Focus_Report,atpage29.67 AccordingtoGartnerAndroid’smarketshare(basedonsmartphonesales)wasonly3.5%inthe thirdquarterof2009and rose to25.5% in the thirdquarterof2010while Symbianenjoyedamarket share of 44.5 % (2009)/36.6% (2010), RIM 20.7% (2009)/14.8% (2010) and iOS 17.1 %(2009)/16.7%(2010),seehttp://www.gartner.com/newsroom/id/1466313.68 See http://readwrite.com/2010/06/30/android_gaining_on_apple_says_report#awesm=~oIyObV0D7s5Do5.69 Seehttp://mobithinking.com/blog/2011‐handset‐and‐smartphone‐sales‐big‐picture.70 See http://techcrunch.com/2014/03/03/gartner‐195m‐tablets‐sold‐in‐2013‐android‐grabs‐top‐spot‐from‐ipad‐with‐62‐share/. See also http://www.tech‐thoughts.net/2012/05/ipad‐vs‐android‐tablet‐market.html#.U6_NwrHN3Am.

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alreadythere.Theyhadahuge leadwithrespecttodevicesales figures,andtherewerefarmoreappsavailableforiOSthanforAndroid.71TheAndroidecosystemhasjustrecentlycaughtupwithiOSwithregardtothetotalnumberofapps,anditstilllagsbehindwhenitcomestothenumberofappsthathavebeenoptimizedfortabletuse.72This isprobablydue toAndroid fragmentation.Hence, theseeminglystrongmarketpositionofAndroidisstillveryyoungand,lookingatthemarketdynamics,itis far fromsure thatAndroidwillbeable tomaintain thisposition in theyears tocome.

Second,innovationcyclesandproductcyclesareveryshortintheindustriesformo‐bile devices,mobileOS andmobile apps.Newversions ofmobileOS likeAndroidand iOS aswell as new versions of smartphones and tablets are released at leastonce a year. Moreover, users often receive their smartphones fromMNOs on thebasisoftwo‐yearcontractsandthereforetendtogetanewsmartphoneatleasteve‐ry second year. In itsmerger decisionMicrosoft/Skype, the EuropeanCommissionconcluded:“Theinnovationcyclesinthesemarketsareshort.Asaresult,softwareandplatformsareconstantlybeingredeveloped.Innovatorsgenerallyenjoyashortleadinthemarket“.73Inthesamedecision,theCommissionheldthateventheacquisitionofpost‐mergermarketsharesofup to90%doesnotnecessarily lead toadominantposition if the relevantmarket is still emerging, dynamic and fast growing.74 ThiswasthecaseforthemarketsforconsumercommunicationserviceslikeSkype,andthesefindingsapplyequallytothemarketformobileOSandtothemarketsformo‐bileappsandservices.

bb)ConstraintsbyCompetitors,EntryandCountervailingBuyerPower

When assessing dominance, the European Commission, particularly takes into ac‐countconstraintsbycompetitors,entryandcountervailingbuyerpower.75

First, theCommissionconsidersconstraintsimposedbytheexistingsuppliesfrom,andthepositioninthemarketof,actualcompetitors.Aswehaveseeninconnectionwiththemarketdefinition,Google’sdecisionsinrelationtoAndroidarenot“largelyinsensitivetotheactionsandreactionsofcompetitors”becauseGooglefaceslivelycompetition,especiallyfromApple(iOS),butalsofromAmazon(FireOS),Microsoft(WindowsPhoneOS)andothercompetitorslikeRIM(BlackBerryOS).In2012and2013,ApplesoldasmanysmartphonesintheUSastheleadingfourAndroidOEMs(Samsung,HTC,LGandMotorola)combined.76OneoutofthreeAndroidtabletssold

71 SeeEvans/Schmalensee,TheAntitrustAnalysisofMulti‐SidedPlatformBusinesses,Dec.2012,http://ssrn.com/abstract=2185373,atpage19footnote29.72 Compare http://lifehacker.com/ios‐vs‐android‐which‐platform‐has‐better‐tablet‐suppo‐1560660066.73 COMM.,7.10.2011,COMP/M.6281–Microsoft/Skype,atparagraph83.74 COMM., 7. 10. 2011, COMP/M.6281 –Microsoft/Skype, at paragraph 108 and following; af‐firmedbyGC,11.12.2013,caseT‐79/12,atparagraphs69andfollowing–CiscoSystemsandMessage‐net/Commission.75 COMM.,Guidance,atparagraph12.76 In2012Appleheldashareof44%whileSamsung,HTC,LGandMotorolahadacombinedshare of 46 %. In 2013 Apple held 45 %, Samsung/HTC/LG/Motorola (combined) 44 %,http://appleinsider.com/articles/14/02/20/apples‐iphone‐led‐2013‐us‐consumer‐smartphone‐sales‐with‐45‐share‐‐‐npd.

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intheUSin2013wasaKindleFire,77andAmazonisexpandinginEuropeaswell.Amazon has just released its new line of Amazon Fire smartphones.78 Likewise,OnePlusoffersahigh‐endsmartphonerunningCyanogenMod11s(aforkedversionof theAndroid4.4) for about 300US$,79 andHuaweiwill sell a variant of its newHonor3smartphonefeaturingtheYandexsuiteofappsinsteadoftheGMS.80

Second, the Commission considers constraints imposed by the credible threat offutureexpansionbyactualcompetitorsorentrybypotentialcompetitors.Lookingatnewlyemergingcompetitorsandpotentialentry, it is important torememberthatthemarket formobileOS is young, innovationdrivenandextremelydynamic.Mi‐crosoftdominatedthis in2006and2007. Inthefollowingyears,Microsoftdidnotonly lose its lead,butpracticallyvanished fromthemarket formobileOSduetoalackofinnovationandaprofoundmisjudgementofthebusinesspotentialoftouchscreenmobiledevices.FormerMicrosoftCEOSteveBallmerwhenaskedtocommentonthe(thennew)iPhonepointedoutinApril2007:“There’snochancethattheiPh‐oneisgoingtogetanysignificantmarketshare.Nochance”.81However,in2010Mi‐crosofttookfirststepstore‐enterthemarketbyintroducing“WindowsPhone7”.In2012, “WindowsPhone8” followed andMicrosoft intensified its cooperationwithNokia. InApril 2014,Microsoft fully acquired themobiledevicesbranchofNokia,therebybecominga vertically integrateddeveloperofmobileOSaswell as apro‐ducerofmobiledevices.82RemarkablyWindowsPhonewasthefastestgrowingmo‐bileOS in theEU5 (Germany,UK, France, Italy, Spain)between January2013 andJanuary2014.83

Inaddition,newmobileOShaveentered(andareconstantlyentering)themarket,forexampleFirefoxOSandTizenOS.MozillahasannouncedplansforsmartphonesrunningFirefoxOSthatwillsellforaslittleas25US$.84TheintroductionofTizenOSoffersanespeciallyhighcompetitivepotentialbecauseTizenOSisbackedbySam‐sung, theworldmarket leader formobiledevices. Samsung seems tobegraduallyshiftingfromAndroidtoTizen.WhilethefirstgenerationofSamsung’ssmartwatch“Gear”wasoriginallybasedonAndroid,thesecondgeneration“Gear2”runsTizen85andthefirstgenerationGearisswitchedtoTizenbyarecentfirmwareupdatethatremovesAndroid.86 Samsung has released its first Tizen based smartphone (Sam‐sungZ)in2014,andithasannouncedthatitwillreleasesmartTVsbasedonTizen

77 See http://arstechnica.com/gadgets/2013/01/kindle‐fire‐nabs‐33‐of‐android‐tablet‐market‐nexus‐7‐just‐8/.78 Seehttp://amzn.com/B00EOE0WKQ.79 Seehttp://www.digitaltrends.com/mobile/oneplus‐one‐news/.80 See http://thenextweb.com/mobile/2014/02/19/yandex‐launches‐android‐firmware‐yandex‐kit‐pushes‐replace‐googles‐apps/.81 See http://macdailynews.com/2007/04/30/microsofts_ballmer_no_chance_apple_iphone_is_going_to_get_any_significant/.82 See http://thebottomline.as.ucsb.edu/2014/04/microsoft‐nokia‐merger‐brings‐new‐competition‐to‐smartphone‐wars.83 Seehttp://www.kantarworldpanel.com/dwl.php?sn=news_downloads&id=428.84 See http://www.economist.com/news/business/21600134‐smartphones‐reach‐masses‐host‐vendors‐are‐eager‐serve‐them‐rise‐cheap.85 See http://www.androidmag.de/news/technik‐news/smartwatch‐plattformen‐android‐wear‐tizen‐pebble‐os‐und‐co‐im‐kurz‐check/.86 See http://www.stuff.tv/galaxy‐gear/original‐samsung‐galaxy‐gear‐smartwatch‐get‐tizen‐upgrade/news.

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in2014.87Mostlikely,allSamsungsmartphoneswillfeatureasimilarUIregardlessoftheunderlyingOS.88ThismightbejustanothersteptoreplaceAndroidbyTizenin the future. In any event, Samsung, like Microsoft, certainly is a company withgreatfinancialresourcesandinnovationpotential.

Third,theCommissionregularlyassesses“buyerpower”(ordemand‐sidepower)asacountervailingfactor.Theterm“buyerpower”doesnotseemadequateinthefirstplaceforthecaseathand,becauseAndroidisopensource.Nobodyhasto“buy” itandnobodyhas tobargain forareasonablepricebecauseGoogledoesnotask foranyroyaltyfee(oranyotherconsideration)inexchangefortheAndroidlicense.Asdescribedabove, anyone can take theAndroid codeanduse it (oreven fork it) atwill.89This in itself raises seriousdoubtswith regard to the assertion thatGooglemightbedominant.Moreover,Googlecouldnotchangethislicensingpractice,evenifitwantedto,notonlybecauseofthestrongactualandpotentialcompetition,butalsobecause theOEMsenjoy a great “bargaining strength”. Samsung is not only apotentialcompetitor,butalsothemostimportantlicenseeofAndroid.IncontrasttoclientPCOS(likeWindows),mobileOSarealwayslicensedtoOEMs,notdirectlytotheconsumers.OEMslikeSamsungorHTC, largeMNOs,andmakersofnon‐MADAAndroid devices like Amazon or Nokia do certainly have sufficient “bargainingstrength”tocounteranyattemptstoshiftthebalanceofpower.

cc)ComparisontotheMicrosoftcases

ThecompetitivestructureofthemarketformobileOSdiffersconsiderablyfromthemarket for clientPCOS,which theEuropeanCommissionhad toassess in theMi‐crosoftcaseswithrespecttotyingWindowsMediaPlayer(WMP,2004)andInternetExplorer(IE,2009)totheWindowsOS.

First, the Commission’sMicrosoft decisions are based on aworldwide, very stableWindowsmarket share of about 90%,whichMicrosoft had consistently held formorethantenyears.90InthemarketformobileOSAndroidtooktheleadonlyafewyears ago (smartphones 2011, tablets 2013). Themobile OSmarket is young andverydynamic.ThemarketformobileOSismarkedbystrongcompetitivepressurewhileMacOSandLinuxneverreallythreatenedMicrosoft’sleadontheclientPCOSmarket.Moreover,itiscommonpracticeforsmartphoneuserstogetanewdeviceeveryyearorat leasteverysecondyear,whilePCsandclientPCOSareusedforamuchlongertime.WindowsXP–thirteenyearsafteritsreleasein2001–stillholdsamarketshareof28.98%!91

87 See http://www.businesskorea.co.kr/article/2143/tizen‐phone‐tv‐samsung‐reveal‐smartphone‐smart‐tv‐based‐tizen‐os‐2014.ThefirstTizenphone“SamsungZ”hasjustbeenreleased,see http://global.samsungtomorrow.com/?p=37149. A Tizen version of the Samsung flagshipsmartphone“S5”mightcomesoon,seehttps://www.zauba.com/import‐s5+tizen/hs‐code‐85171290‐hs‐code.html.88 Seealsohttp://www.cnet.com/news/samsung‐galaxy‐s4‐shows‐off‐tizen‐3‐0/.89 Seepage4above.90 COMM.,24.3.2004,CaseCOMP/C‐3/37.792–Microsoft(InteroperabilityandMediaPlayer),atparagraph432;COMM.,16.12.2009,CaseCOMP/C‐3/39.530–Microsoft(InternetExplorer),atpara‐graph24.91 Seehttp://en.wikipedia.org/wiki/Windows_XP.

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Second,theMicrosoftcaseswerecharacterisedbystrongnetworkeffectsandotherbarrierstoentry,whicheffectivelyshelteredMicrosoftWindowsfromcompetition.TheCommissionstatedthatthe“overallutilitythataconsumerderivesfromaclientPCoperatingsystem…dependsontheapplicationshecanuseonitandthatheexpectstobeabletouseonitinthefuture.IndependentSoftwareVendorswriteapplicationsfortheclientPCoperatingsystemthataremostpopularamongusers.Inotherwords,themorepopularanoperatingsystem is,themoreapplicationswillbewritten for itand themoreapplicationsarewritten foranoperating system, themorepopular itwillbeamongusers”.92TheCommissionheld that thedegreeofubiquity thatWin‐dowshadattainedresultedintheavailabilityofnearlyallcommercialapplicationsforWindows,andoftenonly forWindows.93Finally,anewcomeronthemarketofclientPCOSwouldalsohavetoovercomemarketentrybarriersraisedbythehighcostsofdevelopmentandproducttesting.94

SomeindirectnetworkseffectsarerelevantforthemobileOSmarketaswell.How‐ever,thecompetitivesituationisverydifferent.Thecreationofanewmobileopera‐tion system isby farnot as costly as creatinganewclientPCOS. In recent years,severalnewmobileOShaveentered themarket.DevelopersofnewmobileOSdonothavetostart“fromscratch”.TheycanbuildupontheAndroidcodeandcreateforkedversionsofAndroid(likeAmazonFireOS,CyanogenMod,YiOS),theycanusethesameopensourceLinuxkernelasAndroid (likeTizenOS)or theycanrelyonHTLM5(likeFirefoxOS).

The development of apps in themobile ecosystem also differsmarkedly from thedevelopmentofprograms in theworldofPCs.Building theaverageapp is far lesscomplicatedandfarlesscostlythancreatingaPCprogram.95Therefore,itdoesnotcomeasasurprise that thereare farmoremobileapps than thereeverwerepro‐grams for Windows PCs. Today, the Apple App Store and Google Play each offermore than amilliondifferent apps.96 In spite of its late start, theWindowsPhoneStorealsopassedthe200,000appsmarkin2013.97Moreover,appdevelopersnow‐adays, incontrast toprogramdevelopers forPCs,regularlyhavethe incentiveandtheability todevelopapps formultiplemobileOS (so‐called “multi‐homing”), andtheymake use of this ability. According to a survey, 73% of the app developersbuildtheirappsfortwoormoremobileOS,and62%evensupportthreeormore.98

Multi‐hominghasbecomeeveneasierforappdevelopersduetotheintroductionofHTML5, a markup language that is supported by all major web browsers. This

92 COMM.,16.12.2009,CaseCOMP/C‐3/39.530–Microsoft(InternetExplorer),atparagraph26.93 COMM.,16.12.2009,CaseCOMP/C‐3/39.530–Microsoft(InternetExplorer),atparagraph27and56;COMM.,24.3.2004,CaseCOMP/C‐3/37.792–Microsoft(InteroperabilityandMediaPlayer),atparagraph452.94 COMM.,16.12.2009,CaseCOMP/C‐3/39.530–Microsoft (InternetExplorer), atparagraphs28andfollowing,COMM.,24.3.2004,CaseCOMP/C‐3/37.792–Microsoft(InteroperabilityandMediaPlayer),atparagraph453.95 See e.g. http://waracle.net/how‐much‐does‐it‐cost‐to‐develop‐a‐mobile‐app‐for‐google‐android/orhttp://www.bluecloudsolutions.com/blog/cost‐develop‐app/.96 For iOS see http://ipod.about.com/od/iphonesoftwareterms/qt/apps‐in‐app‐store.htm; forAndroidseehttp://www.appbrain.com/stats/number‐of‐android‐apps(1,193,546appsonMarch31,2014).97 See http://www.phonedog.com/2013/12/17/windows‐phone‐store‐crosses‐200‐000‐app‐mark‐as‐microsoft‐works‐to‐expand‐carrier‐billing/.98 Seehttp://www.appcelerator.com.s3.amazonaws.com/pdf/enterprise‐survey‐q3‐2013.pdf.

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means that HTLM5 is available on allmobile devices regardless of the underlyingmobileOS.Therefore,aHTML5appcanbedevelopedonceandthenrunondifferentmobile OSwithout the necessity of building separate versions for each OS.99 Thisdevelopmentresemblesasituationarising fromthesuccessofSun’sprogramminglanguageJava. Javaoffersauniversalplatformforapplicationsthatcanrunondif‐ferent clientPCOS. In the1990,Microsoft tried toundermineandcripple Javabyintroducing a proprietary “Microsoft JavaVirtualMachine”100 because Java threat‐enedMicrosoft’sdominantpositiononthemarketforclientPCoperatingsystems.101By contrast, Google never did anything to hamper HTML5, but even offers a free“GoogleWebDesigner”tomakeiteasiertocreateinteractiveHTML5‐baseddesignsandmotiongraphics.102

Multi‐homing not only cuts costs for app development, but also reduces users’switchingcosts.On theonehand,manyusersofmobiledevices “multi‐home” too,i.e. theyusemore thanoneapp for similar functionsor services, and– like in theMicrosoft/Skypecase–therearenotechnicaloreconomicconstraintsthatpreventusers fromdownloadingseveralapps for thesame function.103On theotherhand,usersarefarmorewillingtogetmobiledeviceswithadifferentOSiftheycanfindtheapps theyareused to for thenewdevice aswell.Nokiahas justpresented itsnewNokiaXsmartphones.ThesesmartphonesareAndroid‐based,butascnetputit:“Infact,thesoftwaredoesn'tlookathinglikeAndroidatall”.104Rather,theuserinter‐face largely resembles theWindows Phone UI, and the preinstalled suite of appsconsistsoftheMicrosoftandNokiaappsthataretypicallypreinstalledonWindowsPhonedevices(e.g.Bingsearch,NokiaappstoreandNokiaHeremaps).ThismeansthatwhileNokiaXphonesrunAndroidapps,theyofferthetouch,feelanduserex‐perienceofaWindowsphone.ThiswillmakeiteasyforNokiaXuserstoswitchtoWindowsPhonedevicesinthefuturewhileitwillreducetheirincentivetoswitchtootherAndroidphoneswithadifferent,more“Android‐like”userinterface.105

OnemightarguethattherearestillswitchingcostsbecauseusershavetobuytheirappsanewafterswitchingtoanothermobileOS.However,thevastmajorityofappsarefreeofcharge,andonlyveryfewappscostmorethan5€.106Manyuserscom‐pletelyrelyonfreeappswhosedevelopersdrawrevenuemostlyfromadvertising.Itseemssafetoestimatethatveryfewuserswouldhavetospendmorethan20€forapppurchasesafterswitchingtoadevicewithanothermobileOS.Thisisanegligi‐bleamountcomparedtothecostofthenewdeviceorthemonthlycostofnetwork

99 See http://www.forbes.com/sites/ciocentral/2013/01/23/html5‐vs‐native‐mobile‐apps‐myths‐and‐misconceptions/.100 Seehttp://en.wikipedia.org/wiki/Microsoft_Java_Virtual_Machine.101 ForfurtherdetailsseePlaintiff’sJointProposalfortheFindingofFactsinthecaseUSvs.Mi‐crosoft,http://www.justice.gov/atr/cases/f2600/2613‐1.htm,atparagraphs318andfollowing.102 Seehttps://www.google.com/webdesigner/.Thisispreciselywhatonewouldexpectconsid‐eringGoogle’sgeneralbusinessmodelandthebenefitsGooglederivesfromincreasedinternetusage.103 CompareGC,11.12.2013,caseT‐79/12,atparagraphs79and96–CiscoSystemsandMes‐sagenet/Commission.104 Seehttp://www.cnet.com/products/nokia‐x/.105 Compare http://gigaom.com/2014/02/24/hands‐on‐with‐the‐android‐powered‐nokia‐x‐smartphone/.106 This seems clear, although the counts differ considerably, compare e.g.http://148apps.biz/app‐store‐metrics/?mpage=appprice(about65%freeapps,and3.5%costmore5US$) and http://www.flurry.com/bid/99013/The‐History‐of‐App‐Pricing‐And‐Why‐Most‐Apps‐Are‐Free#.U7Wj6bHN0uc(90%freeapps).

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operatorservices.Thissituation,again,differsverymuchfromtheWindowsPCeco‐systemwhereWindowsprogramsoftencosthundredsofEuros,whichwerelostifauserdecidedtoswitchfromWindowstoMacOSorLinux,107andwheremanypro‐gramswerenotavailableatall forMacOSorLinux.ThesebarriersvirtuallydonotexistinthefieldofmobileOS.InadditioninnovationcyclesanddevicelifecyclesaremuchshorterwithregardtomobiledevicesthanfordesktopPCs.

Beforethisbackground,itdoesnotcomeasasurprisethatswitchingmobileOS–ortobemoreexact:switchingmobileecosystems–isfarmorecommonthanswitchingclientPCOS.AccordingtoarecentUSstudy,in2013moreAndroidusersswitchedtoiOSthaneverbefore.108

c)Conclusion

WhiletheFairSearchcomplaintallegesthatthehighmarketsharesofAndroidde‐vices indicateadominantpositionofGoogleonthemarket formobileOS,acloserlookat thecompetitivestructureof thismarketreveals theopposite.Sales figuresmakeaverypoorproxyfordominanceinthefirstplacebecauseAndroiddevicesarenotmadebyGooglebutbyOEMs.Google licensesAndroid to theseOEMswithoutchargingaroyalty fee.Moreover,Google facesstrongcompetitiveconstraints fromactualandpotentialcompetitorsaswellasstrongcountervailingpoweronthede‐mandside.ThemarketformobileOSisyoung,highlydynamicandinnovative.Net‐workeffectsthatcreatedan“applicationsbarriertoentry”intheMicrosoftcasesaremuchlower, iftheyexistatall.Thisis inparticularduetothemuchlowerappde‐velopingcostsandtotheeasyandwidespreadmulti‐homingofapps.ThesuccessofAndroidinspiteoftheinitialleadofAppleiOSisinitselfproofofthisassumption.AsEvansandSchmalenseeobservedin2012:“Apple’siPhonehadanenormousstockofapplications(orapps)beforethefirstAndroidsmartphonewasmarketed…yetasthisiswrittenAndroidphonesaresubstantiallyoutsellingiPhones”.109

Insum,theanalysisaboveindicatesthatGoogledoesnotholdadominantpositionaccordingtoArticle102TFEUinthemarketformobileOSbecauseitsdecisionsarenot“largely insensitivetotheactionsandreactionsofcompetitors,customersand,ultimately, consumers” aswouldbenecessary for findingdominance according totheEuropeanCommission’sGuidance.Onthecontrary,Googlefaceslivelycompeti‐tionandstrongcompetitiveconstraints.

107 Traditionally, softwareprogramswere licensed for theproduct’s lifetime.Only recentlyMi‐crosoft,Adobeandothershavechangedtheirlicensingmodeltoperiodicalsubscriptions.108 Seehttp://bgr.com/2013/11/11/android‐iphone‐switch‐study‐iphone‐5s.109 Evans/Schmalensee, The Antitrust Analysis of Multi‐Sided Platform Businesses, Dec. 2012,http://ssrn.com/abstract=2185373,atpage19footnote29.

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2.MarketsforMobileAppsandMobileServices

Thefindingsaboveapplytothemarketsformobileappsandforrelatedmobileser‐vices as well. Google offers apps for internet search (Search), video streaming(YouTube),navigation(GoogleMaps)andappdistribution(GooglePlay)thatreachconsiderablyhighconsumerattention.For instance, according tocomScoreGoogleMaps ranked second (after Facebook) in 2012 with a “reach” of 65.9 % in thesmartphone market, followed by Google Play (54.3 %), Google Search (53.5 %),Gmail (47.6%) and YouTube (46.4%).110However, according toGlobalWebIndex,only three out of 16 of themost usedmobile apps worldwide were Google apps(Maps, YouTube, Google+), and only two of the underlying services were marketleadersin2013(Maps,YouTube).111Regardlessofthequestionwhichofthesestud‐ies or methods is more accurate, these figures do not automatically mean thatGoogleisdominantinanyofthemarketsinwhichtheseappsorservicesareoffered(towhateverextentthesemarketsmaybedefinedindetail).“Reach”doesmeasurethepercentageofanaudiencethatusedaserviceoveragiventimeframe(typicallyamonth). It isnot ameasure ofmarket share. “Reach” figures for two competingservicesmay sum tomore than 100%becauseusers often “multi‐home” (i.e. usemorethanoneapporserviceforthesamefunction).

Furthermore it is necessary to analysemarketdynamics aswell as constraintsbycompetitors,entryandcountervailingbuyerpower.Themarketsforappsandmo‐bileservicesarecertainlyno lessdynamic thanthemarkets formobileOS.Onthecontrary, therearemillionsof apps, and the vastmajority of themobile appsandservicesareofferedtotheconsumersfreeofcharge.Foreachapporserviceofferedby Google, there are several alternatives by competitors. FairSearch neverthelessclaimsthatcertainappslikeMaps,YouTubeorPlayare“must‐haveGoogleapps”,112in other words, that Android devices are not viable without GMS and thereforeOEMsdefactomustsigntheMADA.Thisismisleadingforseveralreasons.

First,MADAs canbe concludedonadevice‐by‐devicebasis. Inotherwords,OEMswhohavesignedtheMADAremainfreetoproduceotherdeviceswithoutGMS.

Second,mostGMSapps are tools to access internet services, butusers “must”nothavetheseappstoaccessthedesiredGooglemobileservices.Userscanutilisetheseservicesasmobilewebpages(e.g.m.youtube.com)throughanywebbrowser.OEMscan put links to these mobile websites on the home screen or make them theirbrowserfavourites.Itisthereforemisleading,toequateGooglemobileapplicationstoGooglemobileservices.113

110 See https://www.comscore.com/ger/Insights/Press_Releases/2013/2/comScore_Releases_the_2013_Mobile_Future_in_Focus_Report,atpage36.111 See http://blogs.cio.com/mobile‐apps/18229/globalwebindex‐most‐popular‐mobile‐apps‐google.112 See http://www.fairsearcheurope.eu/wp‐content/uploads/2013/04/FairSearch‐Announces‐EU‐Complaint‐on‐Google‐Mobile‐Strategy‐9‐April‐2013.pdf; see also Edelman (footnote 4 above, atpage60).113 Edelman (footnote 4 above, at page 59), however, does imply just this: “Theyalso lack thewidely‐knownGoogleMaps,Gmail, YouTube, and similar applications (collectively,GoogleMobile Ser‐vices)”.

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Third,therearethirdpartyalternativesforpracticallyallGMSapps.TherearethirdpartyappsthatmakeuseofGoogle’smobilewebsitestograntaccesstoGoogleser‐vices likeMapsorYouTube(forexample“vTube”),andthere isagreatnumberofthirdparty apps that relyonmobile services competingwithGoogle (forexampletheMapQuestapp).

Fourth,thereare,atleast,29otherAndroidappstoresinadditiontoPlay.114ManyOEMswhohave signedMADAs (e.g. SamsungorLenovo)preinstall theirownappstoresaswellastheirownappsandthird‐partyappsinadditiontoGMS.

Finally,someOEMsandMNOsactuallyexcludeGMSandGoogleservicesfromtheirAndroid devices, and nevertheless are successfully on the markets. For example,FairSearchmemberNokiahasunderminedFairSearch’sargumentby launching itsownAndroidphoneseries “NokiaX” in2014.NokiaX smartphones comewithoutGMS,butofferaMicrosoft/Nokiasuiteofapps instead.Accordingto firstpressre‐ports,NokiadoesnotevenpermittheuserstoinstallGoogleapps.115Likewise,Ama‐zonreplacedGooglePlaybyitsown(exclusive)“App‐Shop”onitsFiredevices.Nev‐ertheless,oneoutofthreeAndroidtabletssoldintheUSisaKindleFire.116Accord‐ingtoanestimatebytheChineseAndroidappstoreWandoujia,about70%oftheAndroidsmartphonessoldinChinacomewithoutGooglePlay.117Usersobviouslydonot “depend”onGMS,andneitherdoOEMs.Thesupposedly “tying”GMSappsarerather“want‐have”appsthan“must‐have”apps.

TheAndroidecosystemdiffersverymuch fromthe factsandcircumstancesof theMicrosofttyingcases.MicrosoftmadeInternetExplorerpartoftheWindowsOSbyembedding it into theOS itself, therebygivingneitherOEMsnorusersa choiceofwhethertopreinstallitornot.AfterhavingeliminateditscompetitorNetscape,Mi‐crosoft ceased improving Internet Explorer 6.0 for many years, thereby slowingdowninnovationnotonlyinthemarketforwebbrowsers,but intheinternetasawholetothedetrimentoftheconsumers.Microsoftwasableactthiswaybecauseitwasnotsubjecttoanynoticeablecompetitiveconstraintsforanextendedperiodoftime.118Google,onthecontrary,facesstrongactualcompetitionandlivelyentryofnewcompetingappdevelopersandserviceproviders inallpossiblyrelevantmar‐ketsaswellasstrongcountervailingdemand‐sidepowerofOEMslikeSamsungandMNOslikeVodafone.Consumersarenotpowerless,either.Similartousersofcon‐sumercommunicationsservicesintheMicrosoft/Skypecase,theyareusedtomulti‐homingand theycan(andwill) switch tocompetingappsandservices“easily, im‐mediatelyandwithoutcost”iftheconditionsofferedbyGoogleworsen(e.g.ifGooglewouldstarttochargeafeeforappsorservices)orifGooglelosesitsinnovationim‐petus.119

114 Seehttp://www.onepf.org/appstores/.115 Seehttp://www.areamobile.de/news/26782‐nokia‐x‐macht‐station‐in‐berlin(inGerman).116 See http://arstechnica.com/gadgets/2013/01/kindle‐fire‐nabs‐33‐of‐android‐tablet‐market‐nexus‐7‐just‐8/.117 See http://thenextweb.com/asia/2013/11/25/foreign‐games‐in‐china‐lose‐potential‐revenue‐by‐using‐google‐in‐app‐billing‐says‐report/.118 See COMM., 16. 12. 2009, Case COMP/C‐3/39.530 –Microsoft (Internet Explorer), at para‐graphs54andfollowing.119 CompareCOMM.,7.10.2011,COMP/M.6281–Microsoft/Skype,atparagraphs26and121to130.

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3.Conclusion

It is far fromclear thatGoogleholdsadominantpositionaccording toArticle102TFEUeitheronthemarketformobileoperationsystemsoronanyrelevantmarketforappsand/orrelatedmobileservices.Infact,theanalysisaboveratherpointsintheoppositedirection.Nevertheless,forthesakeofcompleteness,IwilllookattheabusesallegedbyFairSearch,i.e.hypotheticallyanalysewhetherthebusinessprac‐ticesofGooglewouldamounttoanabuseofmarketpowerinthemeaningofArticle102TFEUifGoogleheldadominantposition.

III.Abuse

Contrarytoacommonmisunderstanding,Article102TFEU isnotdirectedagainstsizeordominanceofundertakings,butonlyagainst theabuseofadominantposi‐tion.Theobservationthatsuccessfulundertakingsgrowattheexpenseofotherun‐dertakingsthatshrinkorevenvanishfromthemarketisanexpressionofworkingcompetition.Hence,Article102TFEUdoesnotforbidtheacquisitionofadominantpositionormonopoliesassuch.Thisisespeciallytrueoninnovationdrivenmarkets.A dominant undertaking is principally free to compete on themerits. Article 102TFEU,however,comesintoplayifsuchanundertakingabusesitspowertoimpaireffective competition by foreclosing its competitors in an anti‐competitiveway totheharmofconsumers.120

1.ExclusionorPredationbyZeroPricingAndroid?

FairSearchattacksGoogle’sroyalty‐freelicensingofAndroidas“predatorydistribu‐tion”that“makesitdifficultforotherprovidersofoperatingsystemstorecoupinvest‐ments”.121 FairSearch seems to allege that Google engages in a price‐based exclu‐sionary conduct or even in a predatory pricing strategy. However, both forms ofabuse obviously do not apply to the situation at hand because, as the EuropeanCommissionhasunderscored in itsGuidance,bothrequire“engaging inbelow‐costpricing”or “deliberately incurring losses or foregoingprofits”.122 In otherwords, itwould benecessary thatGoogle losemoneybydistributingAndroid on a royalty‐freebasis.Thisissimplynotthecase.

First, likemanyotheropensourceandinternetserviceundertakings,Googleoper‐ates on two‐sidedmarkets onwhich the consumersdecide about the success of aservice, but the remuneration comes from advertising clients. The distribution ofAndroid(andofmostappsandmobileservices)forazeropriceisanindirecttooltoattractasmuchattentionaspossiblebytheconsumers,increasemobileusage,andultimatelymonetise thisusage, throughadvertisingorotherwise.By licensingAn‐droid for free, Googlemakes it possible to offerAndroiddevices for lowerprices.Thisgivesmorepeopleaccesstomobiledevices.Themorepeopleownmobilede‐120 CompareCOMM.,Guidance,atparagraphs19andfollowing.121 See http://www.fairsearcheurope.eu/wp‐content/uploads/2013/04/FairSearch‐Announces‐EU‐Complaint‐on‐Google‐Mobile‐Strategy‐9‐April‐2013.pdf.122 COMM.,Guidance,atparagraphs63,70andfollowing.

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vices,themoretheyarelikelytousetheinternetandhaveachancetochooseGoog‐le's search and other services.More use of these services can translate intomoreadvertising revenue. Google’s business behaviour insofar resembles the businessmodelof suppliersof freeTVservicesor freeadvertisingnewspaperservices thatalsorelyonzeropricing.Thesuppliersofsuchservicesactthiswaynotinordertoforegoprofit,buttodrawprofitwhileatthesametimeimprovingconsumerwelfare(i.e.byofferingfreeservicesormakingpossiblelow‐costsmartphones).

Second, it ishighlyunlikely thatGooglewilleverchange this (successful)businesspractice.Tochargealicensefeeis impossibleforversionsofAndroidthathaveal‐ready been released under a royalty‐free license agreement, and it would not bereasonable for future versions of Android because this would run counter toGoogle’s general business model that is based on commercial online advertising.Providinganopenmobileplatformhasalwaysbeen inGoogle’svital interest.TheopennessofAndroidhasalwaysbeenaqualitythatsetitapartfromtheclosedWin‐dowsPhoneandiOSecosystems,anditisoneofthekeyfactorsofAndroid’ssuccess.

Third,bypursuingabusinessmodelthatisnotonlycommonandgenerallyaccept‐ed,butthebusinessmodelof thedigitaleconomy,Googlecompetesonthemerits.Thiswouldbeinlinewiththe“specialresponsibility”forthepreservationofcompe‐titionthatEUcompetitionlawimposesondominantundertakings,123evenif,,quodnon,Googleheldadominantpositioninanyoftherelevantmarkets(which,baseduponthefindingsabove,ishighlyquestionable).

TheFairSearchcomplaintcloselyresemblesacomplaintbytheGermanmapservice“Euro‐Cities” in this respect. Euro‐Cities, inter alia, offersonlinemaps that canbeimplemented in websites (e.g. for “how to find us”‐information). Euro‐Cities filedcomplaintswiththeGermanFederalCartelOffice(Bundeskartellamt)andtheEuro‐pean Commission claiming that Google was pricing its maps services below costbecauseGoogleMapsdidnotchargealicensefeeformapusage,butratherutilizedthemapsasatooltodrawrevenuefromsearchrelatedadvertising.However,bothcompetition authorities refused to open proceedings against Google on thisground.124WhileitwasobviousthatEuro‐CitieslostcustomersandprofitduetothesuccessofGoogleMaps, thiswasnotdue to a restraint of competition,butdue tocompetitiononthemerits.Google’sbusinessmodelwasinnovative,andtheconsum‐erslikeditbetterthanthemoretraditionalbusinessmodelofEuro‐Citiesthatreliedondirect license fees.Thesameapplieshere.FairSearch’sallegationsamount toacomplaintaboutGoogle’sbusinessmodelmakingitmoredifficultforMicrosoft(astheonlycompetitor thatactuallychargesOEMs for licensingmobileOS) torecoupits investmentswithout changing its own –more traditional and less successful –businessmodel. Inotherwords,FairSearchaskstheEuropeanCommissiontopro‐tectMicrosoftfromcompetition.ItisobviousthatgrantingsuchafrivolousrequestwouldturntherationaleofEUcompetitionlawonthehead.

Itisalsonoteworthyinthiscontext,thatMicrosoftannouncedaradicalchangeofitsbusinessstrategyinApril2014.Inthefuture,MicrosoftwillfollowGoogle’sexample

123 SeeCJ,9.11.1983,case322/81Rec.1983,3461,3511,atparagraph57–Michelin.124 See http://www.i‐comp.org/wp‐content/uploads/2013/07/Google‐Im‐Fadenkreuz.pdf;Körber,WRP2012,761,767(bothinGerman).

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and licenseWindows Phone OS on a royalty‐free basis to some OEMswhomakesmartphonesandsmalltabletsforconsumers125(whilemanyAndroidOEMs,aswehaveseen,mustpayapatentroyaltytoMicrosoftforeveryAndroiddeviceshipped).Likewise,ApplenowoffersitsofficesuiteiWorksforfreetonewbuyersofiOSde‐vicesorMacOSdevices(followingtheGoogleDocsexample).126Thesedevelopmentsunderscore that Google’s licensing practice actually increases competition and, atthesametime,improvesconsumerwelfarebyreducingthecostsofmobiledevices,applicationsandservices,andtherebymakingitpossibleforalargergroupofpeo‐pletobenefitfromtheseinnovations.

Fourth,toforceGoogletochargearoyaltyfeeforAndroid(whichseemstobewhatFairSearch has in mind as a remedy) would not only put Google’s own businessmodel intoquestion. Itwouldalsodistortcompetitiononthemerits inthemarketformobileOSbecauseAndroidOEMswouldhave topay a royalty feenot only toMicrosoftbutalso toGoogle(whileWindowsPhonemaybe licensedroyalty‐free).ThiswoulddecreaseconsumerwelfarebecausetheOEMsorMNOswouldpassonsucharoyaltytotheconsumersbyraisingthepricesofmobiledevicesorformobilenetwork services. Furthermore, such a remedy might put all commercial open‐sourceinitiativesandmosttwo‐sidedbusinessstrategiesunderthe“SwordofDam‐ocles”and therebyendanger thebackboneof thewhole interneteconomy,127eventhoughArticle102TFEUonlyappliestodominantundertakings.WhilethismaybeanoutcomefavorabletoMicrosoft(andbyextensionFairSearch),itwouldbedetri‐mentaltoEuropeanusersandappdevelopers.

Finally,itmightbeargued,thatevenifzeropricingdoesnotconstituteanabuseinthemarketformobileOS, itmight,nevertheless,constituteanabuseinothermar‐kets, e.g. in appmarkets or inmarkets for mobile services, in particular internetsearch.However,thiswouldrequirethatGooglelicenseAndroidinawaythatisapttoforeclosecompetingappsorservicesfromtheseothermarkets.Thisisclearlynotthe case. The situation again differs markedly from theMicrosoft tying cases. Inthesecases,MediaPlayerand InternetExplorerwereubiquitousonWindowsPCsworldwidebecauseMicrosoft technicallymade theseprograms a part of theWin‐dowsOSitself.WithregardtoAndroid,OEMsarefreeeithertobuildAndroid‐basedmobileOSthatarenotcompatible,ortofollowtheCDD,signtheAFAandmakeAn‐droid‐compatibledevices.Inbothcases,theydonothavetoinstallanyGMSapp.128PreinstallingGMSis justanadditionaloption,whichGoogleoffers intheformofaseparatelicenseagreement(MADA)whileAppleandMicrosoftbothtechnicallyem‐bedcertainappsiniOSorWindowsPhone.

125 See http://www.reuters.com/article/2014/04/02/us‐microsoft‐windows‐idUSBREA311OX20140402.126 Seehttp://www.apple.com/creativity‐apps/mac/.127 Compare http://chillingcompetition.com/2013/09/06/some‐thoughts‐on‐the‐new‐anti‐google‐android‐complaint‐23‐predatory‐pricing‐claims/:“Ifwhathasbeenreleasedistrue…thecom‐plaintnotonlychallengesFreeSoftware,itactuallyrunscountertheverylogicofthedigitaleconomy,wheremanyservicesareprovidedfreeofchargeandmonetizedindirectly”.128 TherearesomeAndroid“coreapps”thatmustbepresentAndroidcompatibledevicesaccord‐ingtoCDD/AFA(likeDeskClock,BrowserandCalendar),butOEMscaninstallanyappsthatfulfiltheCDDrequirements.These"coreapp“"aredifferentfromtheappslicensedaccordingtotheMADA(likePlay,MapsandYouTube).Fordetailsseeatpage5aboveandfollowing.

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Insum, foreclosurebytying isanon‐issuewithrespecttotheAndroidOSbecausetheresimplyisnoGMSapporGoogleservicethatisinanywaytiedtotheAndroidOSitself.129FairSearch’spressreleaseallegingthat“Google isusing itsAndroidmo‐bileoperatingsystemasa ‘TrojanHorse’todeceivepartners,monopolizethemobilemarketplace”130isatoddswiththefacts.LicensingAndroidforazeropriceobvious‐ly neither constitutes a price‐based exclusion, nor,a fortiori, predatorypricing onthemarketformobileOSoraforeclosureonanyothermarket.

FairSearch’s“predatorypricing”complaintisclearlywithoutmerit.

2.TyingAppsbyWayoftheMADA?

a)TheFairSearchComplaint’sTyingAllegation

FairSearch’s second complaint states that “Androidphonemakerswhowant to in‐cludemust‐haveGoogleappssuchasMaps,YouTubeorPlayarerequiredtopre‐loadanentiresuiteofGooglemobileservicesandtogivethemprominentdefaultplacementonthephone...Thisdisadvantagesotherproviders,andputsGoogle’sAndroidincon‐trolofconsumerdataonamajorityofsmartphonesshippedtoday”.131FairSearch,inotherwords, accusesGoogleof foreclosing competingappdevelopersbybundlingGoogleappstotheGMS.EdelmanaddswithrespecttotheMADA:“Inordertoobtainkeymobileapps, includingGoogle'sownSearch,Maps,andYouTube,manufacturersmust agree to install all the apps Google specifies,with the prominence Google re‐quires,includingsettingtheseappsasdefaultwhereGoogleinstructs.It'saclassictieandan instanceof full line forcing: Ifaphonemanufacturerwantsanyof theappsGoogleoffers,itmusttaketheothersalso”.132“Googlehasmarketpowerovermultipleserviceswithoutclosesubstitutes[...];Googlethenusesthatpowertocompeluseofitsotherservices,eveninmarketswherecompetitorshaveviableofferings.”133

Instarkcontrasttotheseallegations,theUSFTCandtheSouthKoreanFTCdidnotfindanyviolationofcompetitionlawwithregardtoAndroidortotheMADA.134

FairSearch’ssecondcomplaint,atfirstglance,seemstoaddresssimilarcompetitiveissues as theMicrosoft tying cases in which the European Commission fined Mi‐crosoft forsupposedlytyingMediaPlayerandInternetExplorerto itsclientPCOSWindowswithoutgivingusersasufficientchoice.Uponcloserreview,however,wewillseethattheMicrosofttyingcasesareactuallyverydifferentandmustbedistin‐guishedfromthefactualandlegalsituationathand.

129 ObligationstoinstallGoogleappsorservicesonlycomeintoplayifanOEMdecidestosigntheMADAinadditiontoAFA.130 See http://www.fairsearcheurope.eu/wp‐content/uploads/2013/04/FairSearch‐Announces‐EU‐Complaint‐on‐Google‐Mobile‐Strategy‐9‐April‐2013.pdf.131 See http://www.fairsearcheurope.eu/wp‐content/uploads/2013/04/FairSearch‐Announces‐EU‐Complaint‐on‐Google‐Mobile‐Strategy‐9‐April‐2013.pdf.132 Edelman, see footnote 10 above (italics in the original text); see alsoEdelman (footnote 4above),atpages57andfollowing.133 Edelman(footnote4above),atpage62.134 Seeatpage1aboveandfollowing.

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b)CompetitiveAssessment

WhiletyingmayconstituteanabuseforbiddenbyArticle102lit.dTFEU,EUcompe‐titionlawdoesnotperseforbidthetyingoftwoseparateproducts.Onthecontrary,theEuropeanCommissionunderlinesinitsGuidance:“Tyingandbundlingarecom‐monpracticesintendedtoprovidecustomerswithbetterproductsorofferingsinmorecosteffectiveways.However,anundertakingwhichisdominantinoneproductmarket(ormore)ofa tieorbundle (referred toas the tyingmarket) canharm consumersthrough tyingorbundlingby foreclosing themarket for theotherproducts thatarepartofthetieorbundle(referredtoasthetiedmarket)and,indirectly,thetyingmar‐ket”.135

aa)DominanceontheTyingMarket

In order to distinguish legal ties from illegal ties, the European Commission, as afirst step, assesses dominance on the tyingmarket. Regardless ofwhether or notGoogleisdominantwithrespecttotheAndroidOS,thetyingmarketcanobviouslynotbethemarketformobileOSbecauseGooglelicensesAndroidwithoutanobliga‐tion to install any GMS apps.136 The FairSearch complaint therefore alleges thatGoogle was dominant on the markets for “must‐have Google apps such asMaps,YouTubeorPlay”.137

Aswehaveseen,marketdefinitioninthisfieldofthedigitaleconomyisparticularlyproblematicbecausealltheseappsofferaccesstomobileservicesthatuserscanaswellaccessthroughanywebbrowser.Inaddition,itmightbearguedwithrespecttodevicesliketheAmazonFiredevicesortheNokiaXsmartphones(whichcomewithawhole suite of non‐Google apps) that there is amarket for competing “suites ofapps”ratherthanforindividualapps.

Ifweassumeforthesakeoftheargumentthatseparatemarketsforindividualappsexist, it still is far fromclear thatGoogle isdominantonanyof thesemarketsbe‐causethereisstrongcompetitivepressureaswellasstrongcountervailingdemand‐sidepoweranddemandflexibility.ItisthereforeunlikelythatGoogledominatesanyrelevantappmarket.AppslikeMaps,YouTubeorPlayarerather“wanthaveapps”than“musthaveapps”.

Nevertheless,Iwilltakeafurtherlookattheallegedabuses,i.e.hypotheticallyana‐lysewhetherthebusinesspracticesofGooglewouldamounttoanabuseofmarketpoweraccordingtoArticle102TFEU,iftherewereseparatemarketsforindividualapps(e.g.appsformapservices,search,streamingvideo)andifGoogleheldadomi‐nantpositionononeormoreofthesemarkets.Tobemoreprecise, Iwillpretend,

135 COMM.,Guidance,atparagraph49.136 Bycontrast,Edelman (footnote4above)claims thatAndroid (also)wasa tyingproduct (atpages55andfollowingandatpage60).However,thisisbasedupontheassertionthatGoogledoesnotlicenseAndroidtoOEMsiftheydonotsignMADA.Thisassertionisplainlywrong.ThereobviouslyarefullylicensedforkedversionsofAndroidinstalledondevicesliketheBarnes&NobleNook,onAmazonFiredevicesandonNokiaXsmartphones.Furthermore,thisassertionwasexpresslyrejected inbothcasestowhichEdelmanrefers(Skyhook;NHN&Daum).137 Similarly,Edelman(footnote4above,atpages57andfollowing)focussesonYouTube.137 Seeatpage1aboveandfollowing.

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quodnon,thatGoogleholdsadominantpositiononpresumedmarketsforappsthatoffermobilemapservices(Maps),videostreaming(YouTube)andappdistribution(Play)asFairSearchclaims.

bb)TyingandTiedProductsasDistinctProducts

AccordingtotheEuropeanCommission’sGuidancetying“usuallyreferstosituationswherecustomers thatpurchaseoneproduct(the tyingproduct)arerequiredalso topurchaseanotherproduct from thedominantundertaking (the tiedproduct).Tyingcantakeplaceonatechnicalorcontractualbasis”.138

It isnotbeyondquestion that theGMSappsareseparateproducts. It couldbear‐guedthatthewholeGMSisasingleproduct,whichiscompetingwithothersuitesofAndroidapps that are, for example, offeredbyAmazon,Microsoft orYandex. Fur‐thermore,consideringthefactthatAndroiddevicescompeteagainstverticallyinte‐gratedrivalssuchasApple,competitionfirstandforemosttakesplacebetweenplat‐formsormobileecosystems.

HoweverintheMicrosoftcases,theCommissiontookaquitenarrowviewaccordingtowhichtwodistinctproductsexist,ifthere(also)isaseparatemarketforacertainprogram.139Ifwe,therefore,assumethattheindividualappsareseparateproducts,there are, contrary to theMicrosoft cases, nodiscernible technical ties.Users alsostay free to downloadmostGoogle apps that belong toGMS separately.However,Sec. 3.4MADA outlines an “all‐or‐nothing” rule. OEMswhowish to preinstall oneGoogleapplikePlaymustinstallallGMSapps(butonlyonthatparticulardevice).ThismeansthatuserswhobuyadevicethatissubjecttotheMADAwillalsoalwaysget the whole GMS. Therefore, presuming that the relevant markets are separatemarkets for individual apps/services (and not themarket for suites of apps), theMADAwould constitute a contractual tie.This, however,wouldnotmean that theMADAisperseabusive.AstheCommissionputit,“[t]yingandbundlingarecommonpracticesintendedtoprovidecustomerswithbetterproductsorofferingsinmorecosteffectiveways”.140InordertoassesswhetherofferingtheGMSasasuiteofappscon‐stitutesalegitimate,pro‐competitivetietotheadvantageofconsumersoranillegaltyingpractice inviolationofArticle102TFEU, it isnecessarytoanswertwoaddi‐tional questions that actually are aspects of a single, comprehensive competitiveassessment:

First, does theMADA lead to a foreclosure of competing apps and/or ser‐vices?

Second, does the MADA create countervailing pro‐competitive and pro‐consumer efficiencies? In otherwords, is a presumed tie objectively justi‐fied?

138 COMM.,Guidance,atparagraph48.139 COMM.,24.3.2004,CaseCOMP/C‐3/37.792–Microsoft(InteroperabilityandMediaPlayer),atparagraph804.140 COMM.,Guidance,atparagraph49.

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cc)Foreclosure

BeforeweturntothefirstquestionofwhethertheMADAmightleadtoaforeclosureof competing apps and/or services, it is important to note that combining GoogleappstotheGMSinthecaseathanddoesnotbyitsnatureleadtoaforeclosureef‐fect. In a regular tying case, “theundertaking concerneddoesnotgive customersachoice toobtain the tyingproductwithout the tiedproduct”.141 The customermustbuy the tiedproduct andpay for it, even thoughhedoesnotwant it.At the sametime,sucha“classictie”foreclosescompetitorsbecausethecustomerdoesnotwanttopayfora(redundant)competingproductinadditiontothetiedproduct.142IntheMicrosoft cases, itwas dubious, if this requirementwas fulfilled. The Commissionunderscored in its decisions that the foreclosure requirement mandates a closerreviewif thepresumablytiedproduct isavailableseparately fromthepresumablytyingproductand, inparticular, if thepresumably tiedproduct isavailable freeofcharge.143 Similarly, the Court of Appeal for the D.C. Circuit indicated that the USMicrosofttyingcaseshouldbegovernedbyaruleofreasonapproach,inparticularifthe tie improves thevalueof the tyingproduct tousersand tomakersof comple‐mentarygoods.144

Inthefollowing,IwillanalysewhetherthecombinationofpopularGoogleappslikePlay,Maps or YouTubewith other less popular Google apps like Hangouts in theGMSmightleadtoforeclosureeffects.Inordertodoso,IwillcomparethefactsandcircumstancestotheMicrosoftcases.145

(1)PreinstallationRequirements

First, intheMicrosoftcase,146theEuopeanCommissionunderscoredthattheInter‐netExplorer(IE)wasubiquitousonallWindowsPCs,andthatitwastheonlywebbrowserthatMicrosoftlicensedanddeliveredtotheOEMsaspartoftheWindowsOSitself.Bycontrast,theGMSisnopartoftheAndroidOS.Thereareneithertech‐nical nor contractual ties that link theAndroidOS to theGMS. TheGMS apps arethereforenotasubiquitousonAndroiddevicesasWMPorIEareonWindowsPCs.Googlehastoconcludeaseparatelicensingandpreinstallationagreement(theMA‐

141 SeeCOMM.,24.3.2004,CaseCOMP/C‐3/37.792–Microsoft(InteroperabilityandMediaPlay‐er),atparagraph798;COMM.,16.12.2009,CaseCOMP/C‐3/39.530–Microsoft(InternetExplorer),atparagraph33.142 COMM.22.12. 1987,Cases IV/30.787and31.488,OJ1988,L16/19 (11.3.1988), atpara‐graph75–Eurofix‐Baucov.Hilti.143 COMM.,24.3.2004,CaseCOMP/C‐3/37.792–Microsoft(InteroperabilityandMediaPlayer),atparagraph841;COMM.,16.12.2009,CaseCOMP/C‐3/39.530–Microsoft(InternetExplorer),atpara‐graphs34andfollowing;affirmedGC,17.9.2007,caseT‐201/04,Rec.2007,II‐3601atparagraph977–Microsoft.144 Compare United States vs. Microsoft Corp., 253 F.2d 34, 90 (D.C. Cir 2001) =http://law.justia.com/cases/federal/appellate‐courts/F3/253/34/576095/,at#212.Thisisremarka‐ble,becauseofthesomewhatambivalentapproachoftheUSSupremeCourt,whichtendstotheperserulewithrespecttotying,seee.g.JeffersonParishHosp.Dist.V.Hyde,466U.S.2,15(1984),butalsoheldthatnoteveryrefusal to sell twoproducts separately canbe said to restrain competition (ibidematpage19).145 The2004MicrosoftInteroperabilityandMediaPlayerdecisionistheonlylegallybindingprec‐edent.The2009Microsoftbrowsercasewasresolvedbywayofcommitments.146 Inthefollowing,theterm“theMicrosoftcase”–ifnotmarkedotherwise–relatestotheCaseCOMP/C‐3/39.530–Microsoft(InternetExplorer).

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DA)withOEMslikeanyotherappdeveloper,andassuch,GMScompetesforaccesstoAndroiddevices,andusage,withothersuitesofapps.

Furthermore,theMADAmustbeseeninthecontextofcompetitionamong“mobiledevice ecosystems” (Android, iOS,Windows Phone, BlackBerry and others). MostOEMs installa suiteof appson theirdevicesasconsumersexpect smartphones tocome with functionalities and apps “out of the box”. They expect a modernsmartphoneortablettocomewithacertainsetoffeaturesandfunctions.Google’smaincompetitorsApple,MicrosoftandRIMhavealwaysofferedsuchanexperiencewhile theAndroidOShas beenheavily criticised for being too fragmented.147 TheMADAensuresthatusers–whochoosetobuyadevicewithGMS–getadevicewithafullsetofappsthatoffera“Googleexperience”similartothe“Appleexperience”offeredbytheiOSdevicesorthe“Microsoftexperience”offeredbyWindowsPhonedevices. MADA insofar does not restrict mobile inter ecosystem competition, butenablessuchcompetition.TheGMScertainlyisthemostsuccessfulsuiteofappsforAndroid.MostOEMsopttosigntheMADA.However,therearecompetingsuites.Forexample, Amazon Fire devices and Nokia X smartphones come with alternativesuites of apps offering users an “Amazon experience” or a “Windows Phone‐likeNokia experience” similar to the “Google experience”offeredbyGMS.Yandex alsooffers a full suite of its own apps for Android phones and a free software toolkit(“Yandex.Kit”)thatenablesOEMstocustomizetheirAndroidfirmware.148AllthisisremarkablebecausethereisnointraecosystemcompetitionforalternativesuitesofappsatallwithregardtoiOSdevicesorWindowsPhonedevices.

Second,intheMicrosoftcase,theEuopeanCommissionobservedthatOEMs“hardlyeverdistributecompetingwebbrowsers”, and that “itwasnotpossible forOEMSoruserstoturnoffInternetExplorer”.149GMSapps,bycontrast,arenotpreloadedatall,if anOEMdecidesnot to sign theMADA. If theOEMsigns theMADA fora certaindevice, the OEMmust install all GMS apps, but it is permissible and, in fact, verycommontopreinstallcompetingappsandservicesaswell.ThestandardMADAdoesnot imply any exclusivity. A simple look at any smartphone subject to theMADAproves that allegations claiming the opposite150 are plainly wrong. For example,worldmarket leaderSamsungpreinstalls itsown“SamsungApps”storeon itsAn‐droiddevicesinadditiontoGooglePlayaswellasitsownmediaservice“SamsungHub”.Most other OEMs preinstall and promote their own app stores aswell. Forexample, the popular “SamsungNote3” smartphonecomespreinstalledwith twowebbrowsers,twoemailclients,twophotoviewers,twoconsumercommunicationsapps, two voice search apps and even three cloud media services (Google Drive,SamsungHub,Dropbox).151Inaddition,OEMsandMNOspreinstallthirdpartyapps,therebydisprovingaccusationsaccordingtowhichtheMADAmakesitimpossibleto

147 See e.g. http://www.zdnet.com/androids‐fragmentation‐problem‐just‐got‐a‐whole‐lot‐weirder‐and‐bigger‐7000026681/.148 Seehttp://techcrunch.com/2014/02/19/yandex‐kit/andhttp://kit.yandex.com/.149 COMM.,16.12.2009,CaseCOMP/C‐3/39.530–Microsoft (InternetExplorer), atparagraphs42and43.CompareCOMM.,24.3.2004,CaseCOMP/C‐3/37.792–Microsoft(InteroperabilityandMe‐diaPlayer),atparagraph855.150 InthisveinEdelman(footnote4above),atpages55and68.151 See also O’Connor, Observations on the Economics of Mobile App Suite Bundling,http://www.project‐disco.org/competition/030314‐observations‐on‐the‐economics‐of‐mobile‐app‐suite‐bundling/withanotherexample(SprintGalaxyS4bySamsung).

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preinstall such apps and draw revenue from this source. For example, manysmartphonescomewithpreinstalledDropbox,TwitterandFacebookapps.SamsungalsopreinstallestheTripAdvisorapp.TripAdvisorisamemberofFairSearch.

Moreover,usersareinnowayforcedtousethepreinstalledGMSapps.OtherthanWindowsusersin2004or2009withregardtoWMPorInternetExplorer,AndroidusersareevenfreetodeactivatetheGMSapps. If theydoso, theapps’ iconsauto‐maticallyvanishfromthedevice’sscreen(itisalsopossibletojustremovetheiconsfromthescreenwithoutdeactivatingtheapps).AppledoesnotoffertheseoptionswithregardtotheappsthatcomeembeddediniOS.Likewise,SamsungallowsuserstodeactivateallGMSappsincludingGooglePlay,buttheyarenotpermittedtodeac‐tivatetheSamsungAppsstore,theSamsungHubandthethirdpartyappFlipboard.

Third,intheMicrosoftcases,theCommissionpaidspecialattentiontothefactthatusers were not only unwilling, but also often unable to install competing mediaplayers(2004)orwebbrowsers(2009).Inthe2009case,“theCommissionprelimi‐narilyconsidered thatusersareprevented from switching from InternetExplorer tocompetingwebbrowsers(evenifofferedfreeofcharge)throughdownloadingduetothebarriersassociatedwithsuchaswitch,suchassearching,choosingandinstallingsuchacompetingwebbrowser,whichcanstem froma lackof technicalskills,orberelated to theuser's inertia”.152 In the 2004 case, the Commission considered that“while downloading is in itself a technically inexpensiveway of distributingmediaplayers,vendorsmustexpend resources toovercomeend‐users inertiaandpersuadethemtoignorethepre‐installationofWMP”.153

WhiletheseobservationsmayhavebeencorrectforPCusersfiveortenyearsago,they certainly do not apply to users of mobile devices today. Like the EuropeanCommission described in theMicrosoft/Skype case, there are no technical or eco‐nomicconstraints thatpreventusers fromdownloadingseveralapps for thesamefunction.154MobileOS likeAndroidaredesigned forappdownloads.Theymake itveryeasyforuserstofind,downloadandinstallappsandtocustomizetheirdevices.UsersdonothavetosearchtheinternetforalternativeappsthewayPCusershadtoin2004or2009(althoughinternetsearchhasvastlyimprovedoverthepastyears).Allmobiledevicesofferat leastoneappstore,andallappstoresofferspecialappsearch functions thatmake it very easy to find apps. App stores also offer a userrankingandreviewsystembywhichuserscangetinformationaboutthequalityofapps.Moreover,AndroidOEMscanput links tomobileservicesordownload linksforappsdirectlyonthehomescreen.Usersjusthavetotouchtheselinkstoaccesstheservicesorinstalltheapps.Notechnicalskillsarerequired.155SomeOSsuppliersevenoffercomprehensive“GoogleApplications”packagesfordownload.156

152 COMM.,16.12.2009,CaseCOMP/C‐3/39.530–Microsoft (InternetExplorer), atparagraphs41,47andfollowing.153 COMM.,24.3.2004,CaseCOMP/C‐3/37.792–Microsoft(InteroperabilityandMediaPlayer),atparagraph870.154 CompareGC,11. 12. 2013, caseT‐79/12, atparagraph79and96–CiscoSystemsandMes‐sagenet/Commission.155 Downloadingappscertainlyisno“convolutedmanualprocedure”oreven“unrealisticformostusers”asEdelmanclaims(seefootnote4above),atpages64and65.156 Forexamplehttp://wiki.cyanogenmod.org/w/Google_Apps.

33

Againstthisbackground,itdoesnotcomeasasurprisethat–inmarkedcontrasttotheconditionsofPCusers in2004or2009–usersofmobiledevicesmakeampleuseofdownloadingapps.TheaverageAndroiduserinstallsmorethan50additionalapps on his device, and users ofmobile devices have downloadedmore than 100billionappsintotalasofMay2013.157Thereobviouslyisno“user'sinertia”.

It is important to emphasize that Android offers farmore freedom to OEMs, appdevelopers and users in this respect than any competingmobile OS. There are atleast30Androidappstores158whilethereisjustoneappstoreforiOS(Apple’sownstore)orforWindowsPhone(theMicrosoft/NokiaWindowsPhonestore).AndroidOEMsoftenpreinstalltheirownappstoresinadditiontoGooglePlay.

Furthermore(andagainincontrasttoiOSandWindowsPhone),Androidoffersus‐ersthefreedomtodownloadAndroidappsdirectlyfromothersources(e.g.fromtheapp developer’swebsite or otherwebsites like Chip.de)without having to use anappstoreatall.TheMADAneitherforbidspreinstallingotherappstoresinadditiontoPlay,nordoesitforbidenablingappdownloadsdirectlyfromtheweb.159Thisisparticularly remarkable because OEMswho did not sign theMADA (like AmazonwithregardtoitsFiredevices)oftentakethesefreedomsawayfromusersandappdevelopers by blocking third party app stores and direct app downloads. Againstthisbackground, theMADAdoesnot foreclose appdistribution.TheMADAratherforecloses“walledgardens”inwhichOEMsbinduserstoexclusiveappstores,appsor services.TheMADA therebyactuallyenables competition. It protectsuser free‐dombyrequiringOEMswhochoosetomakeadevicesubjecttotheMADAtocom‐mittoanopendeviceonwhichuserscandownloadandinstalltheappstheydesirewithoutinterference.

Lastbutnot least, the situation at handdiffers verymuch from theMicrosoftcasewithregardtotheaspectof interoperability. InthefirstMicrosoftcase(2004), theEuropeanCommissiondidnotonlyaddressthetyingissue(withrespecttoWMP),butalsoconsidereditanabuseofmarketpowerthatMicrosofthadwithheldessen‐tial interoperability information from its competitors (with respect to the interac‐tion of client PCs runningWindows andworkgroup servers running the competi‐tors’ software). The Commission found that Microsoft made it impossible for itscompetitorstocompeteonthemeritsandthatithamperedtheirabilityandincen‐tive to develop innovative products by withholding this interoperability infor‐

157 Seehttp://www.asymco.com/2013/05/31/100‐billion‐app‐downloads/(May2013).158 Seehttp://www.onepf.org/appstores/.159 Ifusersdownloadanappfromanappstorethatwasnotpreinstalled,oriftheydownloadanappdirectlyfromtheweb,Androidissuesan“unknownsources”warning.Thiswarningisnecessarytoprotectconsumers frommaliciousapps(e.g.appscontainingviruses)becauseGooglecannotcontrolthesafetyof theseapps(as itdoeswithregardtoappsthataredistributedthroughPlay).Userscaneasilyoverridethiswarningonceorforall(see,forexample,http://m.aptoide.com/installer).Thereisno such securitywarning, if users install apps from Play or from other preinstalled app stores like“SamsungApps”.Makersofthird‐partyappstoresarefreetoenterintoagreementswithOEMsaccord‐ingtowhichtheOEMsthencansettheseappstoresas“knownsources”(therebyassumingpartoftheresponsibilityforthesafetyofappsofferedthroughthesestores).Furthermore,itmustbenotedinthiscontext,thatthiswarning–likemanyotherapparent“restrictions”ofAndroid,onlybalancesoutthegreater freedom that Android offers compared to the competingmobile OS.While Android permitsother app stores anddirect download, and thenprotects consumersby issuing amerewarning,Mi‐crosoftandApplerestrictappdevelopersanduserstotheirownexclusiveappstoresinthefirstplace,andtherebycompletelyforecloseallcompetitioninthisrespect.

34

mation.Therefore, theCommission forcedMicrosoft to license the interoperabilityprotocols to thecompetitors fora fair royalty.160Google,on theotherhand,offersthewholeAndroidcodeonaroyalty‐free,opensourcebasistoeverymakerofmo‐bile devices. Google furthermore provides a single set of clear interoperability in‐structionstoallappsdevelopers,includingcompetitors,informoftheCDD.161Thesystemof"intents"usedinAndroidenablestheseappstointegrateseamlesslywithotherservices,allowinguserstheabilitytochoosewhichservicetheyuseforaspe‐cificcategoryofactions.162

In this context, it must also be noted that the remedy imposed by the EuropeanCommissiontoaddressthetyingconcernintheMicrosoftMediaPlayercasewastoforceMicrosofttoofferaWindowsversionwithoutWMP(“WindowsN”)inadditionto the complete version ofWindowswithWMP.163 As indicated above,OEMs arefreetotakeAndroidwithorwithoutGMS.Theykeepthisfreedomforfuturedevices,even if theyhave signed theMADAsince theMADAonly appliesonadevice‐levelbasis.Google’slicensingpractices,thereforealreadyconformtothelegallyapplica‐blestandardregardingtyingandinteroperabilityrequirements(evenif,quodnon,itweredominant).

(2)PlacementRequirements

Withregardto theplacementrequirementsaccordingto theMADA,FairSearchal‐legesa“screenbias”onAndroidphonesthataresubjecttotheMADA.Inthesamevein,Edelmanpointsoutthat“Googlerequiresthatitsappsbethedefault,andGoogledemandsprominentplacementsforitssearchappandappstore.Thesefactorssharplylimitusers'attentiontootherpreloadedapps,reducingcompetitors'willingnesstopayforpreinstallation.…ThankstotheMADA,alternativevendorsofsearch,maps, loca‐tion,email,andotherappscannotoutcompeteGoogleonthemerits;evenifacompeti‐toroffersanapp that'sbetter thanGoogle'soffering, thecarrier isobliged to installGoogle'sappalso[…];totheextentthatmanufacturerscaninstallcompetitors'apps,theycanofferonly inferiorplacementadjacenttoGoogle,withGoogle leftasthede‐fault in key sectors – preventing competitors from achieving scale or outbiddingGoogleforprominentordefaultplacementonagivendevice”.164

Theseconclusionsareclearlyatoddswith the factsandquitemisleading.Again,asimplelookatanyAndroidphonesubjecttotheMADAprovestheopposite.165

160 COMM.,24.3.2004,CaseCOMP/C‐3/37.792–Microsoft(InteroperabilityandMediaPlayer),atparagraphs 30 and following, 546 and following (interoperability), 998 and following (remedy); af‐firmedbyGC,17.9.2007,caseT‐201/04,Rec.2007,II‐3601atparagraphs312andfollowing.161 Seeatpage5above.162 Formoredetails,seeatpages26andfollowingbelow.163 The2004MicrosoftInteroperabilityandMediaPlayerdecisionistheonlylegallybindingprec‐edent.The2009Microsoftbrowsercasewasresolvedbywayofcommitments.164 SeeEdelman,footnote10aboveandfootnote4,atpages63andfollowing.165 ThefollowingpicturesarescreenshotsfromanunbrandedSamsungNote3smartphonewithGMS,runningAndroid4.4.2.Seealsohttp://marketingland.com/htc‐first‐facebook‐fairsearch‐android‐39507(withsomescreenshotsofthe“HTCFirst”smartphone).

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37

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38

storechoicescreen” (picture1).169Furthermore, thedefaulthomescreencontainsanicontotheemailapp(thestandardapp,notGmail)andtheSamsungcameraapp(picture1).Theotherpanelsaremostly filledwithSamsungwidgetsand icons. InadditiontheyfeatureabigFlipboardwidgetandtheDropboxicon(boththirdpartyapps),butnotasingleadditionalGoogleapplicationiconorwidget(picture3).OnallpanelsthelaunchbarfeaturestheiconsforPhone,Contacts,Messages,Browser(the standard Android browser, not Google Chrome) and Apps (the general appsfolder,nottheGooglefolder).

All GMS apps except for Search and Play are not located on the Samsung homescreen,butontheappsscreenthatuserscanaccessbyselectingthe“Apps”iconinthelaunchbar(pictures1,4and5).170ThedefaultappsscreenofSamsungphonesconsists of two panelswith 25 fields each. Of these 50 fields, four are filledwithGoogleicons(8%)whiletheMADArequiresonlyonefieldforasingleGooglefolder(2%).171Samsungfillsmostofthisspacewithiconsforitsownappsandthirdpartyapps.SamsungpositionstwoSamsungfolders(“Samsung”and“GalaxyPlus”)direct‐lybesidesthe“Google”folder.TheGalaxyPlusfoldercontainsthirdpartyappslikeTripAdvisor, Dropbox andEvernote.Moreover, the icons for Samsung’s own appsforpictureviewing(Gallery),mediastreaming(SamsungHub)andconsumercom‐munications(ChatOn)andtheDropboxiconareplaceddirectlyontheappsscreen,while the icons for the competing GMS apps (Photos, Google Play mu‐sic/movies/games/books, Google Drive, Google Hangouts) are placed “one levelbelow”intheGooglefolder(pictures4and5).

Inadditiontotheseobservations,itbearsnotingthatthemoreprominentlyplacedGMSappsSearchandPlayarenoneofthesupposedly“tied”apps.Theyarethesup‐posedly “tying” apps, which most OEMs would install anyway (regardless of theMADA) because users want them. FairSearch even holds them to be “must‐have”apps.Therefore,thecomplaintfocusesontheotherGMSapps(thoseintheGooglefolderonpicture5)andclaimsthattheMADAforcestheseotherappsonOEMsandusers(e.g.GoogleHangouts)bytyingthemtothepresumed“must‐haveapps”and,therebyforeclosingappdevelopersthatcompetewiththeseotherapps.

However,thesupposedly“tied”appsdonotreceiveanyprominentplacementatall.They are regularly located in a single folder on the apps screen represented by asingleGooglefoldericon.TogettothesupposedlytiedGMSappsusersmustopentheapps screen first, and then (regularly) theGoogle folder. Inotherwords, eventhough these apps offer essential functionality, usersmight not even realise thattheyarepresentontheirdeviceuntiltheyactivelylookforthemoruntiltheymakeuseoftheirfunctionality.Thisobviouslyvery“non‐prominent”placementmakesitquitehard,nottosayimpossible,forthesupposedlytiedGMSappsto“sharplylimitusers'attention”tothirdpartyapps(asEdelmanerroneouslyclaims).Furthermore,theseappsarebyfarnotasessentialforusingmobiledeviceasawebbrowser(In‐

169 Notably,usershaveachoicebecausetheMADAonlyrequiresagoodplacementofPlaywhileGoogle’smaincompetitorsAppleandMicrosoftdonotpermitotherappstoresatall.170 OEMsarefreetoputotherGMSappsonthehomescreen,buttheMADAdoesnotrequirethis.171 ThefouriconsaretheGooglefoldericonasrequestedbytheMADA(redcircleonpicture4)andtheiconsforGooglePlay,GoogleMapsandYouTubethatSamsungplacesontheappsscreenoutofitsownchoice(greencircleonpicture4).TheMADAleaves98%ofappsscreentoSamsung.

39

ternetExplorer)oramediaplayer (WMP)are forusingaWindowsPC.While theGMSapps“Gmail”and“Chrome”offeressentialfunctionality(email,web‐browsing),theyareonlypreinstalledinadditiontotheAndroidMailprogramandtheAndroidBrowser,whichareplacedfarmoreprominentlyinthelaunchbar.172

Finally, the placement requirements of theMADA are only binding forOEMs, andtheyonlycovertheinitialdevicesetup.TheusersstaycompletelyfreetomovetheGMSappsandtheSearchwidgetwherevertheywant,toremovetheiconstotheseapps from the smartphones screens or even to deactivate the apps completely(whichautomaticallyalsoremovestheiriconsfromthesmartphonesscreens).

In sum, the MADA obviously does not create an anti‐competitive “screen bias” infavourofGoogle.IfthereisascreenbiasatallonrecentAndroidsmartphones,itisinfavourofSamsung’sorHTC’sownappsandservicesandnotGMS.

(3)DefaultRequirements

AsremedieswithrespecttotheMicrosofttyingallegations,MicrosofthadtoofferaWindows versionwithoutMedia Player (“Windows N”) in the 2004 case,173 or atleastachoicescreenthatmadeitpossibleforuserstoselectawebbrowserinthe2009case.174WhileMicrosofthadtobeforcedtooffera“pure”WindowsNwithoutMediaPlayer,theAndroidOShasalwaysbeenlicensed“pure”,i.e.withouttheGMSwhich OEMs can (but do not have to) license separately by signing theMADA.175Furthermore, theMADA does in noway hamper the OEMs ability to createmorechoicescreens(e.g.byinstallingseveralappsforthesamefunctionsandputtingtheiconssidebysideonthehomescreen),176andAndroidevenincludesseveralchoicescreensbydefault.

The standard MADA requires that Google Search must be set as default for thesearchintent.177However,thisrequirementisofaverylimitedpracticalrelevance.ItmeansthatGoogleSearchisinvokedbydefaultifanappusesthesearchfunctionali‐ty.Inpracticethereishardlyanyappthatusesthisspecificintent.Inparticular,thestandardMADAdoesnotrequireOEMstosetthesearchenginedefaultoftheprein‐stalledAndroidwebbrowsertoGoogleSearch,butleavesthemfreetouseasearchengineoftheirchoice.178Moreover,ifseveralappsofferthesamefunctionwithre‐specttoacertainintent(e.g.search,email,webbrowsingormapservices),Androidautomaticallyopensachoicescreenandasksuserswhichapplicationtheywanttouse.Forexample, ifuserstaponawebaddress, theyaregivenachoiceamongallwebbrowsers that are installed on the device (picture 6). This choice is renewed

172 Ifanotherappcalls for theemail functionorwebbrowsing function,achoicescreenopensandoffersbothemail‐programsorbrowsers(seepicture6).TheGMSappsarenotsetasdefaults.173 COMM.,24.3.2004,CaseCOMP/C‐3/37.792–Microsoft(InteroperabilityandMediaPlayer),atparagraphs1011and following;affirmedbyGC,17.9.2007,caseT‐201/04,Rec.2007, II‐3601‐Mi‐crosoftatparagraphs850andfollowing.174 COMM., 16. 12. 2009, CaseCOMP/C‐3/39.530 –Microsoft (InternetExplorer), commitmentsNo.1and2.175 Seeatpage4aboveandfollowing.176 Seeatpages25and34aboveandfollowing,inparticularpicture1.177 Foranexplanationoftheterm“intent”seefootnote29above.178 Fordetailsseefootnote40above.Itbearsnotinginthiscontext,thatMicrosoftPhone8.1isfarmorerestrictivewithregardtoBingassearchdefault,seedetailsatandinfootnote42above.

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41

In2013,onlythreeoutof16ofthemostusedmobileappsworldwidewereGoogleapps(Maps,YouTube,Google+),andonlytwooftheunderlyingservicesweremar‐ketleaders(Maps,YouTube).182Togivesomefurtherexamples:

AlthoughGoogle+ isnowpartof theGMS,Facebook is thedominantsocialnetwork.OEMs of GMS‐devices can preload the Facebook app because theMADAdoesnot implyanyexclusivity.Likewise,users caneasilydownloadtheFacebookappfromPlayoranyotherappstore,ifitwasnotpreinstalledinthefirstplace.UsershavedownloadedtheFacebookappmorethan500milliontimesfromGooglePlay.

AlthoughGoogleHangouts(formerlyTalk)ispartoftheGMS,andSamsung,in addition, preinstalls its own consumer communications service ChatOn,neitherofthepreinstalledservicesismarketleader.UserspreferWhatsApp,FacebookMessengerandotherserviceslikeSkypeorTwitter.183Theyhavedownloaded the WhatsApp messenger more than 500 million times fromGoogle Play, and the Facebook Messenger, Skype and Twitter apps morethan100milliontimeseach.

With regard to cloud media services, Samsung phones come preinstalledwithGoogleDrive,butalsowithSamsungHubandDropbox.Ofthesethreeservices,Dropboxtooktheclearlead(17%)overGoogleDrive(10%)andSamsungHub(3%)intheUSin2013whileAppleiTuneswasmarketleader(27%).184

InstarkcontrasttousersofdesktopPCsfiveortenyearsago,usersofmobileOSin2014obviouslydonotsticktothepreinstalledapps,butmakeuseoftheenormouschoiceofappsandmobileservicesofferedtothem.Usersmightnotliterallyneedasecondbrowserorasecondmapservice(likenobodyliterallyneedsasecondpairofshoes),butmobileusersobviouslyliketocompareapps,totryoutalternativesandtomulti‐home. Aswe have seen,mobile users (in contrast to PC users) get infor‐mationandassistancethroughspecializedappstoresearchfunctionsandappstoreuser ratings when they look for alternative apps and services, and they typicallydownloaddozensofadditionalapps(mostofthemfreeofcharge).

Finally,Googlealsogivesappdevelopers fargreater freedom than its competitorsdo.Appdeveloperscandistributetheirappsnotonlythroughat least30differentAndroidappstores,butalsocompletelyskipthewholesalelevelandoffertheirappsdirectlyfromtheirownhomepagesorthroughotherwebsites.Inotherwords,appdistributionisopentocompetitionwhileappsforiOSandWindowsPhonemustbedistributedthroughanexclusivesingleappstore.ThegreatfreedomofferedbyAn‐droidhasencouragedappdeveloperswho in turnhavecreateda largenumberaswellasawiderangeofapps.Onlastcount(March2014),userscouldselectfromatotalof1,193,546Androidapps,185andtheymadeampleuseofthischoice.

182 See http://blogs.cio.com/mobile‐apps/18229/globalwebindex‐most‐popular‐mobile‐apps‐google.183 See http://www.1mtb.com/whatsapp‐leads‐the‐global‐mobile‐messenger‐wars‐with‐44‐pc‐market‐share/.184 Seehttp://www.engadget.com/2013/03/21/strategy‐analytics‐cloud‐media‐market‐share/.185 Seehttp://www.appbrain.com/stats/number‐of‐android‐apps.

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Insum,whiletheMADAimposessomerathermodestobligationsonOEMsinordertopreventAndroidfragmentationandtoprovideusersaconsistent“outofthebox”‐experience, Google, on balance, leavesOEMs,MNOs, appdevelopers and users fargreaterfreedomthanitscompetitorsdo.IfOEMssigntheoptionalMADA,theystillenjoyfargreaterfreedomthancurrentlyexistsintheiOSorWindowsPhoneecosys‐tems.ThisalsomeansthatthereisobviouslymoreroomforcompetitiononalllevelsintheAndroidecosystemthanthereisinthecompetingmobileOSecosystems.ThisopennessiswithoutdoubtonemajorreasonforAndroid’ssuccess,andithasena‐bledlivelycompetitionamongmobileappsandservices.

(5)ConsumerHarmorConsumerBenefit?

Forthereasonsstatedabove,multipleappsarecertainlynot“confusingtousers,andadrainon limiteddeviceresources”asEdelmanclaims.186TheseargumentsrefertotheoriginalMicrosoftcaseof2004.187Theyare“fromthepast”andnotinlinewithuserexperienceandtechnologyoftheyear2014.Aswehaveseen,theaveragemo‐bileusertodayvoluntarilyinstallsdozensofapps.Usersareobviouslyabletocopewithmultiple apps.Theymakeuseof the lively competitionamongapps and ser‐vices and theymulti‐home. Likewise, OEMs like Samsung preinstallmultiple appsforthesamefunction(e.g.twoemailprograms,twowebbrowsersandthreecloudservicesontheNote3smartphone).OEMscertainlywouldnotactthisway, if thiswouldconfuseusersandtherebyincreasesupportcosts.

Likewise, thepreinstalledGMSappscertainlydonotconstitute“adrainon limiteddevicesresources”.Again,somesimplemathissufficienttodisprovethisallegation.Mobile apps aredeveloped formobiledownload and, therefore, requireonly verylittleresources.Forexample,GooglePlayrequiresabout10MBofmemory,GoogleMail 7MB, YouTube 13MB, GoogleMaps 16MB and Google Hangouts 23MB.188EvenlowcostAndroidphonesliketheSamsungGalaxyS3minicomewith8GBofmemory,whichequals8,192MB.189ThismeansthattheYouTubeapp,forexample,takesonly0.16%oftheGalaxyS3mini’smemory.Likewise,allGMSappscombinedfillnomorethana fewpercentofanAndroiddevice’smemory, leavingmorethanamplespaceforOEMapps,thirdpartyappsandotherdata.190

It is equally false when Edelman claims that “MADA restrictions harm consumers”because “competing app vendors face greatly reduced ability to subsidize phonesthroughpaymentstomanufacturersforpreinstallationordefaultplacement;Google's

186 QuotefromEdelman,footnote10aboveandEdelman(footnote4above)atpage58.187 SeeCOMM.,24.3.2004,CaseCOMP/C‐3/37.792–Microsoft(InteroperabilityandMediaPlay‐er), atparagraph851.The“limitedresources”‐argumentwas incorrecteven in2004and it isutterlyfalsein2014.188 Theprogramsizesreferto(rounded)figuresfromthesysteminformationofaSamsungNote3(Android4.4.2).SizesmayvaryslightlydependingonthedeviceandtheversionofAndroidrunningonthisdevice.189 Other devices offer 16 GB or even 32 GB of preinstalledmemory. Furthermore, users canupgrademostAndroiddevicesbyinstallingadditional,lowcostMicroSDmemorycards.iOSdevicesdonotpermittheinstallationofsuchmemorycards.190 SeealsoSeealsoO’Connor(footnote151above)whounderlinesthattheaverageappsizeisjust23MB.

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rules leave manufacturers with much less to sell… thereby preventing any pass‐throughpricereductionstoconsumers”.191

Aswehaveseenabove,OEMsandMNOsarefreetooffercompetingappdeveloperspreinstallationandprominentplacementrightnexttoPlayandSearch(andinevenmore prominent positions than the rest of the GMS apps), and OEMs and MNOsmakeuseofthisfreedom.Whileitistrue,thattheMADAleavesthemlesstosell,the“less” rather follows from the fact that theMADAactuallyprohibitsexclusivity. AnOEMorMNOwhodoesnotsigntheMADAcanbargainforanevenhigherpriceforpreinstallationbyofferingappdevelopersorserviceprovidersexclusivitywithre‐gard to their apps or services. As a procompetitive side effect, theMADA actuallyhelps to avoid such exclusive dealings that would reduce consumer choice andtherebyconsumerwelfare.TheMADAinsofarenablesratherthanforeclosescompe‐titionbetweenappsandservices.192

Furthermore,toclaimthattheMADAincreasesthecostofAndroiddevicesbecauseitmakes itharder forOEMstosellpreinstallationto thirdpartyappdevelopers isnotonlyratherfar‐fetched.Itisalsoveryone‐sidedandmisleading.Theallegationisfar‐fetchedbecauseitispossibleandquitecommontosellpreinstallationandprom‐inentplacement to thirdparties,andbecause it is far fromclear thatOEMswouldactually pass on the extra revenue to the consumers. The allegation is one‐sidedbecauseitdoesnottakeintoaccountthattheAndroidOSitselfandtheGMSareli‐censedfreeofcharge.ThislicensingpolicyhasmadeitpossibletosellAndroidde‐vicesatmuchlowerpricesthaniOSdevicesorWindowsPhonedevices inthefirstplace.Forexample,inGermany,userscangetanAndroidsmartphoneforaslittleas52€(including19%salestax)193whiletheleastexpensiveiPhonecosts549€.194Inother words, Google’s licensing policy has opened smartphone markets to low‐incomeconsumers(includingstudents)andtocustomers inthird‐worldcountries.This also largely explainswhyAndroid devices areworldmarket leaderswhen itcomestosalesfigures.195ToclaimthatGoogle’slicensingpolicymakesAndroidde‐vicesmoreexpensive,doesnotonlyconfusethefacts,butturnsthemonthehead.

(6)Conclusion

The allegation that theMADA insolatesGoogle fromcompetition iswrong.Googlefaces strongactual competitionand livelyentryofnewcompetingappdevelopersandmobileserviceprovidersonallrelevantmarkets.OEMscanchoosetosigntheMADAandtopreinstalltheGMS,ortheycandecidetoinstallAndroidwithoutanyGoogleapps. IfOEMsopttosigntheMADA,thisagreementstill leavesmuchmoreroomforcompetitiononalllevelsoftheAndroidecosystemthanAppleorMicrosoft

191 QuotefromEdelman,footnote10above;seealsoEdelman(footnote4above)atpages58,62,65and67.192 See alsoO’Connor (footnote151above): “Edelman’sdefinitionofcompetition isperverse.Hestatesthatbecauseothercompaniescan’tpayforexclusiveaccess,thisissomehowanticompetitive”.193 SamsungGalaxyStarS5280.Likewise,theLGL40withthemostrecentAndroid4.4costslessthan100Euros(pricesaccordingtoAmazon.deonJune12,2014).194 Priceincluding19%salestaxaccordingtotheAppleStore.Inaddition,thereisbasicallynopricecompetitionforiPhoneswhilethereisfiercepricecompetitionforAndroidsmartphones.195 Compare http://www.economist.com/news/business/21600134‐smartphones‐reach‐masses‐host‐vendors‐are‐eager‐serve‐them‐rise‐cheap.

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allowwithregardto thecompeting iOSorWindowsPhoneecosystems. Inaccord‐ancewiththefindingsof theUSFTCandtheSouthKoreanFTC,196 itmustbecon‐cludedthattheMADAdoesnotconstituteananti‐competitiveforeclosure.

Nevertheless, for the sake of completeness, in the following, I will finally analyseprocompetitiveandpro‐consumereffects thatmayserveascountervailing factors.Inaway, I therebygo“backtothebasics”becauseevenif “tying” ingeneral isde‐finedinawideway,anti‐competitivetyingaccordingtoEUcompetitionlawrequiresthat the anti‐competitive effects outweigh the pro‐competitive effects and pro‐consumereffects.

dd)Efficiencies

InitsGuidance,theEuropeanCommissionunderscoresthatit“willlookintoclaimsbydominantundertakingsthattheirtyingandbundlingpracticesmayleadtosavingsinproductionordistributionthatwouldbenefitcustomers.TheCommissionmayalsoconsiderwhether such practices reduce transaction costs for customers,whowouldotherwisebeforcedtobuythecomponentsseparately,andenablesubstantialsavingsonpackaginganddistributioncosts forsuppliers. Itmayalsoexaminewhethercom‐biningtwoindependentproductsintoanew,singleproductmightenhancetheabilitytobring suchaproduct to themarket to thebenefitof consumers.TheCommissionmayalsoconsiderwhethertyingandbundlingpracticesallowthesuppliertopassonefficienciesarisingfromitsproductionorpurchaseoflargequantitiesofthetiedprod‐uct”.197

I have already describedmost efficiencies above.With respect to theMADA, it isquiteobviousthatcombiningGoogleapps inacomprehensivesuiteofapps(GMS)canhelptoreducetransactioncostsforOEMsandconsumers.

AndroidoffersOEMs,appdevelopersandusersfarmorefreedomthanthecompet‐ingmobileOSstoinstallanyapporUItheydesire,tochangedefaultsandtocustom‐izetheirAndroiddevices.Usersofmobiledevicesareableandwillingtomakeuseof this freedom.Nevertheless, theyprefermobiledevices thatoffer an “out of thebox” set of apps to startwith. Androidphonesmust fulfil theseneeds in order toeffectivelycompetewithiPhonesandWindowsPhoneswhoofferasimilardegreeofusability.

This isespecially important forAndroiddevicesbecausetheunparalleled freedomthatAndroidofferstoOEMshasadownsideintheformofAndroidfragmentation.Fragmentation is aproblem for appdeveloperswhowant tomake sure that theirappsrunflawlesslyandsecurelyonasmanydevicesaspossible.FragmentationalsoisaproblemforconsumerswhowanttomakesurethatalltheirfavouriteappsrunonalltheirAndroiddevicesandwhowanttobeabletoswitchAndroiddevicesforanewermodel(e.g.uponrenewalofacontractwithaMNO)withouthavingtoworryabout incompatibilities andswitchingcosts.While fragmentation isnot aproblemwithregardtoiOS(becauseAppleensuresneartoabsoluteuniformity)orwithre‐

196 Seepage1above197 COMM.,Guidance,atparagraph62.

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gardtoWindowsPhone(becauseMicrosoftensuresaveryhighdegreeofuniformi‐ty),itismoreproblematicwithAndroidbecauseGoogle,incontrast,givesAndroidlicenseesfargreaterfreedomwithregardtousingandevenmodifyingtheAndroidcode,tocustomizetheUIandtoinstallapps.198

Tobalancethissituationoutintheinterestofappdevelopers,butalsotothebenefitofconsumerswhowantdevicesthatarecompatiblewithasmanyAndroidappsaspossible,GooglefollowsanapproachthatgivesOEMsandMNOsthefreedomtooptformoreconformityandinteroperability inseveralsteps.Aswasdescribedabove,step1istheoptiontofollowtheCDDrequirementsdefacto.Step2istocommittofollow the CDD contractually by signing the AFA. Step 3 is to offer users an evenmorecomprehensive“Googleexperience”bysigningtheMADAandpreinstallingtheGMS.

TosigntheMADAisoptional,butevenifweassumethatthefreedomofchoiceofOEMs is somewhat limited because users expect them to deliver Android phoneswithGMS,aperspectivethatonlyseestherestrictionsimposedbytheMADAisdis‐tortedbecause theMADAdoesonly takeaway freedoms fromAndroidOEMs thatWindowsorWindowsPhoneOEMsneverhadinthefirstplace.Inaddition,theMA‐DAmakes it impossible forOEMsorMNOs to exclusively limitusers to theirownappstores,appsandservicesbycreating“walledgardens”(likeAmazondoeswithitsFiredevices).Inthisrespect,theMADAactuallyimprovesconsumerwelfarebyprotectingconsumers’freedomofchoice.

While tying usually involves an element of exploitation (the buyer of product “A”mustalsobuyandpay forproduct “B”even thoughhedoesnotwant it), theGMS(likeAndroid itself) is free of charge. This reduces production costs andmakes itpossibleforOEMstoofferlow‐pricesmartphonestogroupsofconsumerswhocouldotherwise not afford to buy a smartphone or tablet. Themore deviceswhich aresubjecttotheMADAaresold,themoreuserscanmakeuseofGoogleservices.This,in turn, allows Google to draw indirect revenue from advertising and, thereby, tokeep investing in the improvementofmobileOS,appsandservices. IfOEMscould“cherry‐pick”Google’sbusinessmodelmightnotworkanymore.This,inturn,mightleadtoincreaseddevicepricesandareductionofinnovation.

Insum,theMADAhelpstoimprovethequalityofAndroiddevicesbyofferingusersan“outofthebox”experiencecomparabletoiOSorWindowsPhoneandimprovingintra and inter ecosystem competition. It helps to cut costs for the production ofAndroid devices whilemaking it possible for Google to receive the remunerationthatitneedstokeepinnovating.TheMADAfurthermoreimprovesinteroperabilityofdevicesandappsthroughouttheAndroidecosystem.Ittherebyalsohelpstore‐ducethecostsofappdevelopmenttotheadvantageofappdevelopersandconsum‐ersalike.

198 O’Connor (footnote 151 above) also rightfully underlines these efficiencies while Edelman(footnote10above)notonly ignores theobvious consumerbenefitsof theMADA,butboldly claimsthattheydonotexist(“therearenoplausiblepro‐consumerbenefitstotheGoogleMADArestrictionsIanalyzeabove”).

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3.Conclusion

Bybuildingasuiteofapps(GMS)andonlylicensingGMSasawholebywayoftheMADA,Googlepursuesa legitimatebusiness interestwithout foreclosing competi‐tiononthemarketsforappsandmobileservices.Onthecontrary,theMADAfacili‐tates competition on themeritswithApple,Microsoft and others.OEMs receive afullsuiteofappsonaroyalty‐freebasis.Consumersprofitby inexpensiveAndroiddevices and a user experience comparable to iOS andWindowsPhone.Moreover,appdevelopersandconsumersbothbenefitfromincreasedinteroperabilitywithintheAndroidecosystem.

Uponcloserreview,thesecondFairSearchcomplaint,likethefirst,iswithoutmerit.

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C.ClosingRemarks

ThereisacertainironyinthefactthatthefirstchargeoftheFairSearchcomplaintaccusesGoogle of anti‐competitively foregoing profits by giving awayAndroid forfree,whilethesecondchargeaccusesGoogleofanti‐competitivelydrawingindirectprofitfromAndroidandGoogleappsafterall.TheFairSearchcomplaintprofoundlymisunderstands (ormisrepresents) the functioningof two‐ormultisidedbusinessmodels that are thebackboneofdigital economybyartificially splitting them intotwoseparatefieldsoftransactionsinsteadoflookingatthelargerpicture.Thecom‐plaintalsomisstatescompetitiononthemarketformobileOSaswellasinthefieldofmobileapps.

MarkZuckerberg, CEOofFacebook,which isoneofGoogle’smain competitors foronlineadvertising(andassuchaveryunsuspiciouswitness)putsitasfollows:“An‐droidisgrowingquickly,andwe’reexcitedthattheplatformisopenandthatitallowsustobuildthesegreatexperiences[by installingFacebookHome].Ithinkthatthis isreallygoodforGoogletoo.Something likethiscouldencouragea lotofpeopletogetAndroidphones,because I thinkpeoplereallycareaboutFacebook. Ina lotofways,thisisoneofthebestFacebookexperiencesthatyoucanget.Ofcourse,alotofpeoplealsoloveiPhones–Ilovemine,andIwouldliketobeabletodeliverFacebookHomethereaswell”.199

WhileZuckerbergisrightinattributingAndroid’ssuccesstoitsopennessforcompe‐titionandwhiletheUSFTCandtheSouthKoreanFTChavebothclearedGoogleofaccusationswithregard toAndroidandMADA,FairSearchhas,nonetheless,askedtheCommission“tomovequicklyanddecisivelytoprotectcompetitionandinnovationinthiscriticalmarketasconsumersincreasinglyturntoamobileplatformdominatedbyGoogle’sAndroidoperatingsystem”.

However, neither competition nor innovation is “at risk” and nobody forces con‐sumerstobuyAndroiddevices.Onthecontrary,thefactthatusersandOEMspreferdevicesrunningGoogle’smobileOStodevicesrunningothermobileOSisanexpres‐sionofworkingcompetitionon themerits.Thecontractual frameworkofAndroidandGMS(Androidlicense,CDD,AFA,MADA)offersOEMs,appdevelopersandusersafreedomofchoicewhichisunparalleledbyotherOS.ThisfreedomandopennesshasledtoanincreaseofchoicewithregardtomobileOS(e.g.byallowingthedistri‐bution of forked versions of Android) and app distribution. Likewise, Google’s li‐censingpolicyhasincreasedconsumerchoicewithregardtodevicesrunningmobileOSaswellaswithregardtoappsandmobileservices.TherearemoredistributionchannelsandmoreappsforAndroidthanforanyothermobileOS,andtheMADAdefactoprohibits“walledgardens”bywhichOEMsandMNOscouldotherwiserestrictconsumerchoicebywayofexclusivityagreements.

Insum,notanticompetitiveforeclosure,butunparalleledopennessforcompetitionandlowdeviceprices,whichbothresultfromGoogle’sopenlicensingpolicy,arethesecretofAndroid’ssuccess.

199 See http://www.macrumors.com/2013/04/04/zuckerberg‐androids‐openness‐offers‐opportunity‐for‐way‐better‐experience‐than‐iphone/.

48

Against thisbackground, theFairSearchcomplaintultimatelydoesnotaimtopro‐tectcompetitionorconsumers,asitpretendsto.ItratherstrivestoshelterMicrosoftfromcompetitionbyabusingcompetitionlawtoattackGoogle’sbusinessmodelandtosubvertcompetition.What it reallymeans is, “theCommissionmustactquicklybecausetheconsumerspreferAndroidtoWindowsPhone,andwedonotlikethat”.

TheCommissionshouldnotwalkintothistrap,butquicklyanddecisivelyrejecttheFairSearchcomplainttomakeclearthatitisnotwillingtoendorsesuchattemptstoabuse competition law and competition authorities for anticompetitive purposes.Instead, the Commission should act in accordancewith theUS FTC and the SouthKoreanFTCandprotectinnovation,consumerchoiceandconsumerwelfarebylet‐tingcompetitioninthehighlydynamicfieldofmobileOS,appsandservicesrunitscourse.

AsAntoinedeSaintExupéryputit:“Weshouldnottrytoforeseethefuture,butmakeitpossible”.200

200 AntoinedeSaintExupéry,CitadelleorTheWisdomoftheSands(1948).