competition

Aptoide, a Play Store rival, cries antitrust foul over Google hiding its app

Posted by | Android, antitrust, app-store, Apps, aptoide, China, competition, Developer, Europe, european commission, european union, Google, Google Play, huawei, online marketplaces, operating systems, play store, Portugal, TC | No Comments

As US regulators gear up to launch another antitrust probe of Google’s business, an alternative Android app store is dialling up its long time complaint of anti-competitive behavior against the search and smartphone OS giant.

Portugal-based Aptoide is launching a campaign website to press its case and call for Google to “Play Fair” — accusing Mountain View of squeezing consumer choice by “preventing users from freely choosing their preferred app store”.

Aptoide filed its first EU antitrust complaint against Google all the way back in 2014, joining a bunch of other complainants crying foul over how Google was operating Android.

And while the European Commission did eventually step in, slapping Google with a $5BN penalty for antitrust abuses last summer after a multi-year investigation, rivals continue to complain the Android maker still isn’t playing fair.

In the case of Aptoide, the alternative Android app store says Google has damaged its ability to compete by unjustifiably flagging its app as insecure.

“Since Summer 2018, Google Play Protect flags Aptoide as a harmful app, hiding it in users’ Android devices and requesting them to uninstall it. This results in a potential decrease of unique Aptoide users of 20%. Google Play Protect is Google’s built-in malware protection for Android, but we believe the way it works damages users’ rights,” it writes on the site, where it highlights what it claims are Google’s anti-competitive behaviors, and asks users to report experiences of the app being flagged.

Aptoide says Google has engaged in multiple behaviors that make it harder for it to gain or keep users — thereby undermining its ability to compete with Google’s own Play Store.

“In 2018, we had 222 million yearly active users. Last month (May’19), we had 56 million unique MAU,” co-founder and CEO Paulo Trezentos tells TechCrunch. “We estimate that the Google Play removal and flagging had cause the loss of 15% to 20% of our user base since June’18.”

(The estimate of how many users Aptoide has lost was performed using Google SafetyNet API which he says allows it to query the classification of an app.)

“Fortunately we have been able to compensate that with new users and new partnerships but it is a barrier to a faster growth,” he adds.

“The googleplayfair.com site hopes to bring visibility to this situation and help other start ups that may be under the same circumstances.”

Among the anti-competitive behaviors Aptoide accuses Google of engaging in are flagging and suspending its app from users’ phones — without their permission and “without a valid reason”.

“It hides Aptoide. User cannot see Aptoide icon and cannot launch. Even if they go to ‘settings’ and say they trust Aptoide, Aptoide installations are blocked,” he says. “If it looks violent, it’s because it’s a really aggressive move and impactful.”

Here’s the notification Aptoide users are shown when trying to override Google’s suspension of Aptoide at the package manager level:

Even if an Aptoide user overrides the warning — by clicking ‘keep app (unsafe)’ — Trezentos says the app still won’t work because Google blocks Aptoide from installing apps.

“The user has to go to Play Protect settings (discover it it’s not easy) and turn off Play protect for all apps.”

He argues there is no justification for Aptoide’s alternative app store being treated in this way.

“Aptoide is considered safe both by security researchers [citing a paper by Japanese security researchers] and by Virus Total (a company owned by Google),” says Trezentos, adding: “Google is removing Aptoide from users phone only due to anticompetitive practices. Doesn’t want anyone else as distribution channel in Android.”

On the website Aptoide has launched to raise awareness and inform users and other startups about how Google treats its app, it makes the claim that its store is “proven… 100% secure” — writing:

We would like to be treated in a fair way: Play Protect should not flag Aptoide as a harmful app and should not ask users to uninstall it since it’s proven that it’s 100% secure. Restricting options for users goes against the nature of the Android open source project [ref10]. Moreover, Google’s ongoing abusive behaviour due to it’s dominant position results in the lack of freedom of choice for users and developers.We would like to keep allowing users and developers to discover and distribute apps in the store of their choice. A healthy competitive market and a variety of options are what we all need to keep providing the best products.

Trezentos stands by the “100% secure” claim when we query it.

“We think that we have a safer approach. We call it  ‘security by design’: We don’t consider all apps secure in the same way. Each app has a badge depending on the reputation of the developer: Trusted, Unknown, Warning, Critical,” he says.

“We are almost 100% sure that apps with a trusted badge are safe. But new apps from new developers, [carry] more risk in spite of all the technology we have developed to detect it. They keep the badge ‘unknown‘ until the community vote it as trusted. This can take some weeks, it can take some months.”

“Of course, if our anti-malware systems detect problems, we classify it as ‘critical’ and the users don’t see it at all,” he adds.

Almost 100% secure then. But if Google’s counter claim to justify choking off access to Aptoide is that the app “can download potentially harmful apps” the same can very well be said of its Play Store. And Google certainly isn’t encouraging Android users to pause that.

On the competition front, Aptoide presents a clear challenge to Google’s Android revenues because it offers developers a more attractive revenue split — taking just 19%, rather than the 30% cut Google takes off of Play Store wares. (Aptoide couches the latter as “Google’s abusive conditions”.)

So if Android users can be persuaded to switch from Play to Aptoide, developers stand to gain — and arguably users too, as app costs would be lower.

While, on the flip side, Google faces its 30% cut being circumvented. Or else it could be forced to reduce how much it takes from developers to give them a greater incentive to stock its shelves with great apps.

As with any app store business, Aptoide’s store of course requires scale to function. And it’s exactly that scale which Google’s behavior has negatively impacted since it began flagging the app as insecure a year ago, in June 2018, squeezing the rival’s user-base by up to a fifth, as Aptoide tells it.

Trezentos says Google’s flagging of its app store affects all markets and “continues to this day” — despite a legal ruling in its favor last fall, when a court in Portugal ordered Google to stop removing Aptoide without users’ permission.

“Google is ignoring the injunction result and is disregarding the national court. No company, independently of the size, should be above court decisions. But it seems that is the case with Google,” he says.

“Our legal team believe that the decision applies to 82 countries but we are pursuing first the total compliance with the decision in Portugal. From there, we will seek the extension to other jurisdictions.”

“We tried to contact Google several times, via Google Play Protect feedback form and directly through LinkedIn, and we’ve not had any feedback from Google. No reasons were presented. No explanation, although we are talking about hiding Aptoide in millions of users’ phones,” he adds.

“Our point in court it’s simple: Google is using the control at operating system level to block competitors at the services level (app store, in this case). As Google has a dominant position, that’s not legal. Court [in Portugal] confirmed and order Google to stop. Google didn’t obey.”

Aptoide has not filed an antitrust complaint against Google in the US — focusing its legal efforts on that front on local submissions to the European Commission.

But Trezentos says it’s “willing to cooperate with US authorities and provide factual data that shows that Google has acted with anti-competitive behaviour” (although he says no one has come knocking to request such collaboration yet.)

In Europe, the Commission’s 2018 antitrust decision was focused on Android licensing terms — which led to Google tweaking the terms it offers Android OEMs selling in Europe last fall.

Despite some changes rivals continue to complain that its changes do not go far enough to create a level playing field for competition.

There has also not been any relief for Aptoide from the record breaking antitrust enforcement. On the contrary Google appears to have dug in against this competitive threat.

“The remedies are positive but the scope is very limited to OEM partnerships,” says Trezentos of the EC’s 2018 Android antitrust decision. “We proposed additionally that Google would be obliged to give the same access privileges over the operating system to credible competitors.”

We’ve reached out to the Commission for comment on Aptoide’s complaint.

While it’s at least technically possible for an OEM to offer an Android device in Europe which includes key Google services (like search and maps) but preloads an alternative app store, rather than Google Play, it would be a brave device maker indeed to go against the consumer grain and not give smartphone buyers the mainstream store they expect.

So, as yet, there’s little high level regulatory relief to help Aptoide. And it may take a higher court than a Portuguese national court to force Google to listen.

But with US authorities fast dialling up their scrutiny of Mountain View, Aptoide may find a new audience for its complaint.

“The increased awareness to Google practices is reaching the regulators,” Trezentos agrees, adding: “Those practices harm competition and in the end are bad for developers and mobile users.”

We reached out to Google with questions about its treatment of Aptoide’s rival app store — but at the time of writing the company had not responded with any comment. 

There have also been some recent rumors that Aptoide is in talks to supply its alternative app store for Huawei devices — in light of the US/China trade uncertainties, and the executive order barring US companies from doing business with the Chinese tech giant, which have led to reports that Google intends to withdraw key Android services like Play from the company.

But Trezentos pours cold water on these rumors, suggesting there has been no change of cadence in its discussions with Huawei.

“We work with three of top six mobile OEMs in the world. Huawei is not one of them yet,” he tells us. “Our Shengzhen office had been in conversations for some months and they are testing our APIs. This process has not been accelerated or delayed by the recent news.”

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Europe agrees platform rules to tackle unfair business practices

Posted by | Amazon, Android, antitrust, competition, e-commerce, eBay, EC, eCommerce, Europe, european commission, european parliament, european union, General Data Protection Regulation, Google, google search, Google Shopping, Margrethe Vestager, microsoft store, online marketplaces, online platforms, search engine, search engines, search results | No Comments

The European Union’s political institutions have reached agreement over new rules designed to boost transparency around online platform businesses and curb unfair practices to support traders and other businesses that rely on digital intermediaries for discovery and sales.

The European Commission proposed a regulation for fairness and transparency in online platform trading last April. And late yesterday the European Parliament, Council of the EU and Commission reached a political deal on regulating the business environment of platforms, announcing the accord in a press release today.

The political agreement paves the way for adoption and publication of the regulation, likely later this year. The rules will apply 12 months after that point.

Online platform intermediaries such as ecommerce marketplaces and search engines are covered by the new rules if they provide services to businesses established in the EU and which offer goods or services to consumers located in the EU.

The Commission estimates there are some 7,000 such platforms and marketplaces which will be covered by the regulation, noting this includes “world giants as well as very small start-ups”.

Under the new rules, sudden and unexpected account suspensions will be banned — with the Commission saying platforms will have to provide “clear reasons” for any termination and also possibilities for appeal.

Terms and conditions must also be “easily available and provided in plain and intelligible language”.

There must also be advance notice of changes — of at least 15 days, with longer notice periods applying for more complex changes.

For search engines the focus is on ranking transparency. And on that front dominant search engine Google has attracted more than its fair share of criticism in Europe from a range of rivals (not all of whom are European).

In 2017, the search giant was also slapped with a $2.7BN antitrust fine related to its price comparison service, Google Shopping. The EC found Google had systematically given prominent placement to its own search comparison service while also demoting rival services in search results. (Google rejects the findings and is appealing.)

Given the history of criticism of Google’s platform business practices, and the multi-year regulatory tug of war over anti-competitive impacts, the new transparency provisions look intended to make it harder for a dominant search player to use its market power against rivals.

Changing the online marketplace

The importance of legislating for platform fairness was flagged by the Commission’s antitrust chief, Margrethe Vestager, last summer — when she handed Google another very large fine ($5BN) for anti-competitive behavior related to its mobile platform Android.

Vestager said then she wasn’t sure breaking Google up would be an effective competition fix, preferring to push for remedies to support “more players to have a real go”, as her Android decision attempts to do. But she also stressed the importance of “legislation that will ensure that you have transparency and fairness in the business to platform relationship”.

If businesses have legal means to find out why, for example, their traffic has stopped and what they can do to get it back that will “change the marketplace, and it will change the way we are protected as consumers but also as businesses”, she argued.

Just such a change is now in sight thanks to EU political accord on the issue.

The regulation represents the first such rules for online platforms in Europe and — commissioners’ contend — anywhere in the world.

“Our target is to outlaw some of the most unfair practices and create a benchmark for transparency, at the same time safeguarding the great advantages of online platforms both for consumers and for businesses,” said Andrus Ansip, VP for the EU’s Digital Single Market initiative in a statement.

Elżbieta Bieńkowska, commissioner for internal market, industry, entrepreneurship, and SMEs, added that the rules are “especially designed with the millions of SMEs in mind”.

“Many of them do not have the bargaining muscle to enter into a dispute with a big platform, but with these new rules they have a new safety net and will no longer worry about being randomly kicked off a platform, or intransparent ranking in search results,” she said in another supporting statement.

In a factsheet about the new rules, the Commission specifies they cover third-party ecommerce market places (e.g. Amazon Marketplace, eBay, Fnac Marketplace, etc.); app stores (e.g. Google Play, Apple App Store, Microsoft Store etc.); social media for business (e.g. Facebook pages, Instagram used by makers/artists etc.); and price comparison tools (e.g. Skyscanner, Google Shopping etc.).

The regulation does not target every online platform. For example, it does not cover online advertising (or b2b ad exchanges), payment services, SEO services or services that do not intermediate direct transactions between businesses and consumers.

The Commission also notes that online retailers that sell their own brand products and/or don’t rely on third party sellers on their own platform are also excluded from the regulation, such as retailers of brands or supermarkets.

Where transparency is concerned, the rules require that regulated marketplaces and search engines disclose the main parameters they use to rank goods and services on their site “to help sellers understand how to optimise their presence” — with the Commission saying the aim is to support sellers without allowing gaming of the ranking system.

Some platform business practices will also require mandatory disclosure — such as for platforms that not only provide a marketplace for sellers but sell on their platform themselves, as does Amazon for example.

The ecommerce giant’s use of merchant data remains under scrutiny in the EU. Vestager revealed a preliminary antitrust probe of Amazon last fall — when she said her department was gathering information to “try to get a full picture”. She said her concern is dual platforms could gain an unfair advantage as a consequence of access to merchants’ data.

And, again, the incoming transparency rules look intended to shrink that risk — requiring what the Commission couches as exhaustive disclosure of “any advantage” a platform may give to their own products over others.

“They must also disclose what data they collect, and how they use it — and in particular how such data is shared with other business partners they have,” it continues, noting also that: “Where personal data is concerned, the rules of the GDPR [General Data Protection Regulation] apply.”

(GDPR of course places further transparency requirements on platforms by, for example, empowering individuals to request any personal data held on them, as well as the reasons why their information is being processed.)

The platform regulation also includes new avenues for dispute resolution by requiring platforms set up an internal complaint-handling system to assist business users.

“Only the smallest platforms in terms of head count or turnover will be exempt from this obligation,” the Commission notes. (The exemption limit is set at fewer than 50 staff and less than €10M revenue.)

It also says: “Platforms will have to provide businesses with more options to resolve a potential problem through mediators. This will help resolve more issues out of court, saving businesses time and money.”

But, at the same time, the new rules allow business associations to take platforms to court to stop any non-compliance — mirroring a provision in the GDPR which also allows for collective enforcement and redress of individual privacy rights (where Member States adopt it).

“This will help overcome fear of retaliation, and lower the cost of court cases for individual businesses, when the new rules are not followed,” the Commission argues.

“In addition, Member States can appoint public authorities with enforcement powers, if they wish, and businesses can turn to those authorities.”

One component of the regulation that appears to be being left up to EU Member States to tackle is penalties for non-compliance — with no clear regime of fines set out (as there is in GDPR). So it’s not clear whether the platform regulation might not have rather more bark than bite, at least initially.

“Member States shall need to take measures that are sufficiently dissuasive to ensure that the online intermediation platforms and search engines comply with the requirements in the Regulation,” the Commission writes in a section of its factsheet dealing with how to make sure platforms respect the new rules.

It also points again to the provision allowing business associations or organisations to take action in national courts on behalf of members — saying this offers a legal route to “stop or prohibit non-compliance with one or more of the requirements of the Regulation”. So, er, expect lawsuits.

The Commission says the rules will be subject to review within 18 months after they come into force — in a bid to ensure the regulation keeps pace with fast-paced tech developments.

A dedicated Online Platform Observatory has been established in the EU for the purpose of “monitoring the evolution of the market and the effective implementation of the rules”, it adds.

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Google still claimed to be blocking search rivals on Android, despite Europe’s antitrust action

Posted by | Alphabet, Android, antitrust, competition, Europe, european commission, France, G Suite, Google, huawei, Marissa Mayer, Mobile, play store, Qwant, Search, search engines, smartphones, TC | No Comments

Mobile licensing changes made by Google this fall, when it tweaked terms for OEMs wanting to license its Android smartphone platform on devices destined for the European market, don’t appear to be offering succour to search rivals — despite being triggered by an antitrust ruling intended to reset the competitive playing field.

The European Commission found the search giant guilty of anti-competitive practices related to its Android platform this summer, slapping the company with a $5BN fine. The decision required Google cease practices judged to be illegally skewing the market and do so within 90 days.

It was the second such major EC antitrust finding against Google, after last year’s Google Shopping ruling, when the company was warned that having been found dominant in search it had a “special responsibility” to avoid breaching antitrust rules in any market it plays in.

Google disputes the Commission’s findings of competitive abuse in both cases, and has lodged legal appeals.

But the nature of competition law demands action in the meanwhile, given the threat of punitive penalties for any continued breach. So in October Google responded to the Commission’s Android ruling by updating its regional compatibility agreement to provide a route for OEMs to unbundle key services from the Android OS — rather than requiring its suite of Google apps be pre-loaded for devices to get the Play Store.

However it also incorporated licensing fees for some unbundled configurations (e.g. Android + Play Store). At the same time it said it would not charge any fee to include search or Chrome. And it said it was offering incentives for OEMs to place its eponymous, market dominating search engine (and/or browser) prominently on their devices — despite one of the behaviors the Commission judged illegal being payments Google had made to certain large manufacturers and mobile carriers to exclusively pre-install Google Search.

The Commission did not prescribe specific remedies for the anticompetitive behaviours it pegged to Android — saying it’s “Google’s sole responsibility to make sure that it changes its conduct in a way that brings the infringements to an effective end”.

Though it warned it would closely monitor the company’s conduct, noting that any finding of continued non-compliance would risk fresh fines — of up to 5% of the average daily turnover of Alphabet for each day of non-compliance.

The key word there is “effective” — in terms of what the Commission is watching for.

Meanwhile Google’s dominant position in search naturally makes it the smartphone consumer’s go-to choice — which in turn means there’s a natural incentive for device makers not to ditch Google as the search default. At least for mainstream devices.

But Google’s new European licensing terms for Android appear to be piling additional pressure on OEMs not to switch even for more experimental and/or regional device launches, according to privacy-focused search engine Qwant.

The suggestion is Google’s licensing changes have essentially blocked the launch of an Android device with Qwant search rather than Google as the default.

Pay to install

Its experience suggests Google’s initial ‘remedy’ — far from delivering an “effective end” to the competitive infringements the Commission found — is actively steering OEMs away from search alternatives and rival companies.

Qwant, a French startup, launched its non-tracking search offering back in 2013, and has been on a growth tear on its home turf in recent months — winning over high profile users in the public sector as concern has risen about Silicon Valley’s intrusive grip on user data.

The French National Assembly and the French Ministry of the Armed Forces Minister announced this fall they’d switch to Qwant instead of Google as their default.

Of course the startup is still a minnow compared to Google. But it’s growing: Qwant tracks queries rather than users (given it doesn’t track people), and it says it generated 2.6BN queries in 2016; which grew to 9BN last year; and is now on track to end this year with around 18BN queries.

“So if we think about it that means that last year we were three days of Google; this year six days of Google — not so bad!” says co-founder Eric Leandri.

“In France we have now more than 6% of the market,” he continues. “In Germany something like 2%. And we are still growing. We do growth of 20% by month for the last four months. The growth in our revenue is two digit too, by month.”

Earlier this year it had been hoping to make additional regional marketshare gains by securing a deal to be pre-loaded on Android smartphones destined for European markets. A spokesman tells us it has a framework agreement with Huawei. (The Chinese Android OEM is second only to Samsung in global marketshare terms, according to analysts.)

The Commission’s antitrust ruling opened the door to this possibility, given it banned Google from prohibiting OEMs from launching non-Google approved Android forks. So after the ruling things were looking good for Qwant, with the startup on the cusp of securing a device deal for a few European countries, as Leandri tells it. 

He blames Google’s licensing changes for putting the kibosh on a launch they’d been expecting to be able to announce in November. Early that month the startup pinged us to trail forthcoming news — of “a major partnership that will allow us to accelerate in the smartphone market” — only to go silent.

A few weeks later it got in touch again to say it had had to postpone the announcement.

“We are very near to one or two deals to be by default or in the list of search engines in some Android cell phone made by a very large Asian manufacturer… Just for Europe, and just for some countries in Europe but we are talking about 10 million or 20 million of cell phones,” says Leandri now.

“And when we have won the bid against Google in October then Google start to say that in Europe you have to pay $40 for Android. So now if you install Qwant you have to pay $40 and if you install Google they give you some cash.”

“Before it was impossible to bid against Google because Google was blocking everything. Now you can — but now the solution of Google is you have to pay $40 if you don’t install Google by default with Chrome just on the bar. You know the bar that is fixed on Android. And this is again an abuse of their dominant position,” he adds.

“Because if I want, for example, 10 million smartphones, the guy has to pay $400M to Google. Do you really think they will pay $400M to Google just to install Qwant?”

Google’s rebuttal of the Commission’s antitrust finding for Android has focused on claims that its approach of free licensing combined with a bundle of Google services has generally enabled competition to thrive in the mobile app ecosystem, as well as claiming lower prices are a “classic hallmark… of robust competition”.

Yet Qwant’s experience offers a clear counterpoint, underlining how challenging it remains to try to compete with Google’s core search business when the same company also dominates the smartphone market and can just throw the levers of Android’s licensing terms to configure how much ‘appetite’ OEMs have for investing in alternative search defaults (given tiny hardware profit margins in the Android space).

After Qwant won over Huawei to building a device with its search engine in prime position, Leandri says it was Google’s changes to the licensing terms for Android that threw a spanner in the works.

“After that pressure then the manufacturer doesn’t know how to react now,” he says, confirming he believes there’s currently no chance for the device to be launched. Not without further changes to how Android operates in the market — i.e. further regulatory intervention.

“So we will work a lot with the European Commission to stop that,” he adds. “But again, again my question is why Google goes that way?”

We reached out to Google to ask about the fees it would charge an OEM wanting to launch an Android device with Google Play but without Google search as the default in Europe.

We also asked how charging a fee for Android if OEMs don’t also bundle Google services can help increase competition, per the Commission’s intention.

At the time of writing Google had not responded to our questions.

We also reached out to Huawei for comment and will update this story with any response.

Even if Qwant and Huawei get their way, and European buyers in a handful of countries are able to choose to buy an Android device with a little search localization as its differentiating out-of-the-box twist, Leandri isn’t under any illusions that a majority of consumers will still switch back to Google of their own accord — given its dominance of search.

He reckons those who’d stick with a non-Google search choice might be as low as a third or 40%. 

But his point is that, as it stands, Qwant doesn’t even have the chance to try competing against the Google Goliath on its own terms. And he argues that’s simply not fair. 

“Google has billions to make advertisement to ask people to switch, right. And they can even do advertisement on the Play Store for zero because they control the Play Store. Why they don’t come back to a normal market where we are all on the same line and they just compete with advertisement, with pushing their products, with a better proposition of value. It’s crazy, it’s crazy!” he says.

“They have 95% of the market, and on that market they expect that if they don’t have the search by default there then they don’t do money with the Play Store. This is bullshit. They do billions of euros with the app on the Play Store each year. With the 30% that they take on the apps. So this is not true. This is not true, sorry.

“So right now this is our goal and my main work actually is just to obtain the right to have a fair competition — a simple, fair competition.”

“I don’t want to dismantle Google. I don’t want Google to be fined 10BN. I don’t care. The only thing I want is to have the right to have a fair competition,” he adds.

We asked the European Commission to respond to Qwant’s experience, and for an update on its monitoring of Google’s compliance with the Android antitrust ruling.

A spokeswoman declined to comment on an individual case but we understand the Commission has been sending questionnaires to market players as part of its compliance monitoring.

It’s clear the regulator’s intention with the Android decision was to expand consumer choice by creating opportunities for competition that didn’t exist before — including for rival search and browser providers to be able to compete on the merits with Google when it comes to pre-loading their products on Android devices.

So if the Commission’s monitoring efforts confirm instances where competition is being blocked, as appears the case here with Qwant, further interventions will surely follow.

Leandri also points out that Google made much the same arguments vis-a-vis ‘fair competition’ more than a decade ago — when it called for the then computing incumbent, Microsoft, not to stand in the way of Internet upstarts by bundling MSN search into its Internet Explorer web browser. 

“The market favors open choice for search, and companies should compete for users based on the quality of their search services,” said Marissa Mayer in 2006then Google’s vice president for search products. “We don’t think it’s right for Microsoft to just set the default to MSN. We believe users should choose.”

“I totally agree with what they say in 2006! Just exchange Microsoft for Google and that’s it!” he says now, adding: “We have to fight because there is not a lot of other way. But I stop fighting tomorrow as soon as I have a fair competition.

“I’m not waiting for the Commission to make the competition. Right now the percentage of growth that I have in France it’s not based on the Commission who has won or not. It’s based on our value proposition.”

Leandri is also president of the Open Internet Project, a European organization whose members lobby for regulatory action to rein in what they view as Google’s abusive dominance of digital markets, and which was also involved in the Google Shopping complaints — though he points out that in the Android case three of the five complainants are American. 

“We are the only European. So the problem is not only for a small startup in Europe. Who, y’know, complained because ‘Google is so cool’. And we are so dumb. And so ridiculous. But the problem is for Oracle, it’s for the Fair Search. It’s not for kids.”

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Seized cache of Facebook docs raise competition and consent questions

Posted by | Android, api, competition, Damian Collins, data protection law, DCMS committee, Developer, Europe, european union, Facebook, Mark Zuckerberg, Onavo, Policy, privacy, Six4Three, Social, social network, terms of service, United Kingdom, vpn | No Comments

A UK parliamentary committee has published the cache of Facebook documents it dramatically seized last week.

The documents were obtained by a legal discovery process by a startup that’s suing the social network in a California court in a case related to Facebook changing data access permissions back in 2014/15.

The court had sealed the documents but the DCMS committee used rarely deployed parliamentary powers to obtain them from the Six4Three founder, during a business trip to London.

You can read the redacted documents here — all 250 pages of them.

In a series of tweets regarding the publication, committee chair Damian Collins says he believes there is “considerable public interest” in releasing them.

“They raise important questions about how Facebook treats users data, their policies for working with app developers, and how they exercise their dominant position in the social media market,” he writes.

“We don’t feel we have had straight answers from Facebook on these important issues, which is why we are releasing the documents. We need a more public debate about the rights of social media users and the smaller businesses who are required to work with the tech giants. I hope that our committee investigation can stand up for them.”

The committee has been investigating online disinformation and election interference for the best part of this year, and has been repeatedly frustrated in its attempts to extract answers from Facebook.

But it is protected by parliamentary privilege — hence it’s now published the Six4Three files, having waited a week in order to redact certain pieces of personal information.

Collins has included a summary of key issues, as the committee sees them after reviewing the documents, in which he draws attention to six issues.

Here is his summary of the key issues:

  • White Lists Facebook have clearly entered into whitelisting agreements with certain companies, which meant that after the platform changes in 2014/15 they maintained full access to friends data. It is not clear that there was any user consent for this, nor how Facebook decided which companies should be whitelisted or not.

Facebook responded

  • Value of friends data It is clear that increasing revenues from major app developers was one of the key drivers behind the Platform 3.0 changes at Facebook. The idea of linking access to friends data to the financial value of the developers relationship with Facebook is a recurring feature of the documents.

In their response Facebook contends that this was essentially another “cherrypicked” topic and that the company “ultimately settled on a model where developers did not need to purchase advertising to access APIs and we continued to provide the developer platform for free.”

  • Reciprocity Data reciprocity between Facebook and app developers was a central feature in the discussions about the launch of Platform 3.0.
  • Android Facebook knew that the changes to its policies on the Android mobile phone system, which enabled the Facebook app to collect a record of calls and texts sent by the user would be controversial. To mitigate any bad PR, Facebook planned to make it as hard of possible for users to know that this was one of the underlying features of the upgrade of their app.
  • Onavo Facebook used Onavo to conduct global surveys of the usage of mobile apps by customers, and apparently without their knowledge. They used this data to assess not just how many people had downloaded apps, but how often they used them. This knowledge helped them to decide which companies to acquire, and which to treat as a threat.
  • Targeting competitor Apps The files show evidence of Facebook taking aggressive positions against apps, with the consequence that denying them access to data led to the failure of that business.

Update: 11:40am

Facebook has posted a lengthy response (read it here) positing that the “set of documents, by design, tells only one side of the story and omits important context.” They give a blow-by-blow response to Collins’ points below though they are ultimately pretty selective in what they actually address.

Generally they suggest that some of the issues being framed as anti-competitive were in fact designed to prevent “sketchy apps” from operating on the platform. Furthermore, Facebook details that they delete some old call logs on Android, that using “market research” data from Onava is essentially standard practice and that users had the choice whether data was shared reciprocally between FB and developers. In regard to specific competitors’ apps, Facebook appears to have tried to get ahead of this release with their announcement yesterday that it was ending its platform policy of banning apps that “replicate core functionality.” 

The publication of the files comes at an awkward moment for Facebook — which remains on the back foot after a string of data and security scandals, and has just announced a major policy change — ending a long-running ban on apps copying its own platform features.

Albeit the timing of Facebook’s policy shift announcement hardly looks incidental — given Collins said last week the committee would publish the files this week.

The policy in question has been used by Facebook to close down competitors in the past, such as — two years ago — when it cut off style transfer app Prisma’s access to its live-streaming Live API when the startup tried to launch a livestreaming art filter (Facebook subsequently launched its own style transfer filters for Live).

So its policy reversal now looks intended to diffuse regulatory scrutiny around potential antitrust concerns.

But emails in the Six4Three files suggesting that Facebook took “aggressive positions” against competing apps could spark fresh competition concerns.

In one email dated January 24, 2013, a Facebook staffer, Justin Osofsky, discusses Twitter’s launch of its short video clip app, Vine, and says Facebook’s response will be to close off its API access.

As part of their NUX, you can find friends via FB. Unless anyone raises objections, we will shut down their friends API access today. We’ve prepared reactive PR, and I will let Jana know our decision,” he writes. 

Osofsky’s email is followed by what looks like a big thumbs up from Zuckerberg, who replies: “Yup, go for it.”

Also of concern on the competition front is Facebook’s use of a VPN startup it acquired, Onavo, to gather intelligence on competing apps — either for acquisition purposes or to target as a threat to its business.

The files show various Onavo industry charts detailing reach and usage of mobile apps and social networks — with each of these graphs stamped ‘highly confidential’.

Facebook bought Onavo back in October 2013. Shortly after it shelled out $19BN to acquire rival messaging app WhatsApp — which one Onavo chart in the cache indicates was beasting Facebook on mobile, accounting for well over double the daily message sends at that time.

Onavo charts are quite an insight into facebook’s commanding view of the app-based attention marketplace pic.twitter.com/Ezdaxk6ffC

— David Carroll 🦅 (@profcarroll) December 5, 2018

The files also spotlight several issues of concern relating to privacy and data protection law, with internal documents raising fresh questions over how or even whether (in the case of Facebook’s whitelisting agreements with certain developers) it obtained consent from users to process their personal data.

The company is already facing a number of privacy complaints under the EU’s GDPR framework over its use of ‘forced consent‘, given that it does not offer users an opt-out from targeted advertising.

But the Six4Three files look set to pour fresh fuel on the consent fire.

Collins’ fourth line item — related to an Android upgrade — also speaks loudly to consent complaints.

Earlier this year Facebook was forced to deny that it collects calls and SMS data from users of its Android apps without permission. But, as we wrote at the time, it had used privacy-hostile design tricks to sneak expansive data-gobbling permissions past users. So, put simple, people clicked ‘agree’ without knowing exactly what they were agreeing to.

The Six4Three files back up the notion that Facebook was intentionally trying to mislead users.

In one email dated November 15, 2013, from Matt Scutari, manager privacy and public policy, suggests ways to prevent users from choosing to set a higher level of privacy protection, writing: “Matt is providing policy feedback on a Mark Z request that Product explore the possibility of making the Only Me audience setting unsticky. The goal of this change would be to help users avoid inadvertently posting to the Only Me audience. We are encouraging Product to explore other alternatives, such as more aggressive user education or removing stickiness for all audience settings.”

Another awkward trust issue for Facebook which the documents could stir up afresh relates to its repeat claim — including under questions from lawmakers — that it does not sell user data.

In one email from the cache — sent by Mark Zuckerberg, dated October 7, 2012 — the Facebook founder appears to be entertaining the idea of charging developers for “reading anything, including friends”.

Yet earlier this year, when he was asked by a US lawmaker how Facebook makes money, Zuckerberg replied: “Senator, we sell ads.”

He did not include a caveat that he had apparently personally entertained the idea of liberally selling access to user data.

Responding to the publication of the Six4Three documents, a Facebook spokesperson told us:

As we’ve said many times, the documents Six4Three gathered for their baseless case are only part of the story and are presented in a way that is very misleading without additional context. We stand by the platform changes we made in 2015 to stop a person from sharing their friends’ data with developers. Like any business, we had many of internal conversations about the various ways we could build a sustainable business model for our platform. But the facts are clear: we’ve never sold people’s data.

Zuckerberg has repeatedly refused to testify in person to the DCMS committee.

At its last public hearing — which was held in the form of a grand committee comprising representatives from nine international parliaments, all with burning questions for Facebook — the company sent its policy VP, Richard Allan, leaving an empty chair where Zuckerberg’s bum should be.

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Google tweaks Android licensing terms in Europe to allow Google app unbundling — for a fee

Posted by | Android, antitrust, Apps, chrome os, competition, Europe, Google, google-chrome, Mobile, operating system, play store, smartphones | No Comments

Google has announced changes to the licensing model for its Android mobile operating system in Europe,  including introducing a fee for licensing some of its own brand apps, saying it’s doing so to comply with a major European antitrust ruling this summer.

In July the region’s antitrust regulators hit Google with a recordbreaking $5BN fine for violations pertaining to Android, finding the company had abused the dominance of the platform by requiring manufacturers pre-install other Google apps in order to license its popular Play app store. 

Regulators also found Google had made payments to manufacturers and mobile network operators in exchange for exclusively pre-installing Google Search on their devices, and used Play store licensing to prevent manufacturers from selling devices based on Android forks.

Google disputes the Commission’s findings, and last week filed its appeal — a legal process that could take years. But in the meanwhile it’s making changes to how it licenses Android in Europe to avoid the risk of additional penalties heaped on top of the antitrust fine.

Hiroshi Lockheimer, Google’s senior vice president of platforms & ecosystems, revealed the new licensing options in a blog post published today.

Under updated “compatibility agreements”, he writes that mobile device makers will be able to build and sell Android devices intended for the European Economic Area (EEA) both with and without Google mobile apps preloaded — something Google’s same ‘compatibility’ contracts restricted them from doing before, when it was strictly either/or (either you made Android forks, or you made Android devices with Google apps — not both).

“Going forward, Android partners wishing to distribute Google apps may also build non-compatible, or forked, smartphones and tablets for the European Economic Area (EEA),” confirms Lockheimer.

However the company is also changing how it licenses the full Android bundle — which previously required OEMs to load devices with the Google mobile application suite, Google Search and the Chrome browser in order to be able to offer the popular Play Store — by introducing fees for OEMs wanting to pre-load a subset of those same apps under “a new paid licensing agreement for smartphones and tablets shipped into the EEA”.

Though Google stresses there will be no charge for using the Android platform itself. (So a pure fork without any Google services preloaded still wouldn’t require a fee.)

Google also appears to be splitting out Google Search and Chrome from the rest of the Google apps in its mobile suite (which traditionally means stuff like YouTube, the Play Store, Gmail, Google Maps, although Lockheimer’s blog post does not make it clear which exact apps he’s talking about) — letting OEMs selectively unbundle some Google apps, albeit potentially for a fee, depending on the apps in question.

“[D]evice manufacturers will be able to license the Google mobile application suite separately from the Google Search App or the Chrome browser,” is what Lockheimer unilluminatingly writes.

Perhaps Google wants future unbundled Android forks to still be able to have Google Search or Chrome, even if they don’t have the Play store, but it’s really not at all clear which configurations of Google apps will be permitted under the new licensing terms, and which won’t.

“Since the pre-installation of Google Search and Chrome together with our other apps helped us fund the development and free distribution of Android, we will introduce a new paid licensing agreement for smartphones and tablets shipped into the EEA. Android will remain free and open source,” Lockheimer adds, without specifying what the fees will be either. 

“We’ll also offer new commercial agreements to partners for the non-exclusive pre-installation and placement of Google Search and Chrome. As before, competing apps may be pre-installed alongside ours,” he continues to complete his trio of poorly explained licensing changes.

We’ve asked Google to clarify the various permitted and not permitted app configurations, as well as which apps will require a fee (and which won’t), and how much the fees will be, and will update this post with any response.

The devil in all those details should become clear soon though, as Google says the new licensing options will come into effect on October 29 for all new (Android based) smartphones and tablets launched in the EEA.

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EU fines Asus, Denon & Marantz, Philips and Pioneer $130M for online price fixing

Posted by | antitrust, asus, Boston Acoustics, competition, competition law, consumer electronics, Denon & Marantz, eCommerce, Europe, european union, Gadgets, hardware, Marantz, Margrethe Vestager, Philips, price - fixing, Pricing | No Comments

The European Union’s antitrust authorities have issued a series of penalties, fining consumer electronics companies Asus, Denon & Marantz, Philips and Pioneer more than €110 million (~$130M) in four separate decisions for imposing fixed or minimum resale prices on their online retailers in breach of EU competition rules.

It says the four companies engaged in so-called “fixed or minimum resale price maintenance (RPM)” by restricting the ability of their online retailers to set their own retail prices for widely used consumer electronics products — such as kitchen appliances, notebooks and hi-fi products.

Asus has been hit with the largest fine (63.5M), followed by Philips (29.8M). The other two fines were 10.1M for Pioneer, and 7.7M for Denon & Marantz.

The Commission found the manufacturers put pressure on ecommerce outlets who offered their products at low prices, writing: “If those retailers did not follow the prices requested by manufacturers, they faced threats or sanctions such as blocking of supplies. Many, including the biggest online retailers, use pricing algorithms which automatically adapt retail prices to those of competitors. In this way, the pricing restrictions imposed on low pricing online retailers typically had a broader impact on overall online prices for the respective consumer electronics products.”

It also notes that use of “sophisticated monitoring tools” by the manufacturers allowed them to “effectively track resale price setting in the distribution network and to intervene swiftly in case of price decreases”.

“The price interventions limited effective price competition between retailers and led to higher prices with an immediate effect on consumers,” it added.

In particular, Asus, was found to have monitored the resale price of retailers for certain computer hardware and electronics products such as notebooks and displays — and to have done so in two EU Member States (Germany and France), between 2011 and 2014.

While Denon & Marantz was found to have engaged in “resale price maintenance” with respect to audio and video consumer products such as headphones and speakers of the brands Denon, Marantz and Boston Acoustics in Germany and the Netherlands between 2011 and 2015.

Philips was found to have done the same in France between the end of 2011 and 2013 — but for a range of consumer electronics products, including kitchen appliances, coffee machines, vacuum cleaners, home cinema and home video systems, electric toothbrushes, hair driers and trimmers.

In Pioneer’s case, the resale price maintenance covered products including home theatre devices, iPod speakers, speaker sets and hi-fi products.

The Commission said the company also limited the ability of its retailers to sell-cross border to EU consumers in other Member States in order to sustain different resale prices in different Member States, for example by blocking orders of retailers who sold cross-border. Its conduct lasted from the beginning of 2011 to the end of 2013 and concerned 12 countries (Germany, France, Italy, the United Kingdom, Spain, Portugal, Sweden, Finland, Denmark, Belgium, the Netherlands and Norway).

In all four cases, the Commission said the level of fines were reduced — 50% in the case of Pioneer; and 40% for each of the others — due to the companies’ co-operation with its investigations, specifying that they had provided evidence with “significant added value” and had “expressly acknowledg[ed] the facts and the infringements of EU antitrust rules”.

Commenting in a statement, commissioner Margrethe Vestager, who heads up the bloc’s competition policy, said: The online commerce market is growing rapidly and is now worth over 500 billion euros in Europe every year. More than half of Europeans now shop online. As a result of the actions taken by these four companies, millions of European consumers faced higher prices for kitchen appliances, hair dryers, notebook computers, headphones and many other products. This is illegal under EU antitrust rules. Our decisions today show that EU competition rules serve to protect consumers where companies stand in the way of more price competition and better choice.”

We’ve reached out to all the companies for comment.

The fines follow the Commission’s ecommerce sector inquiry, which reported in May 2017, and showed that resale-price related restrictions are by far the most widespread restrictions of competition in ecommerce markets, making competition enforcement in this area a priority — as part of the EC’s wider Digital Single Market strategy.

The Commission further notes that the sector inquiry shed light on the increased use of automatic software applied by retailers for price monitoring and price setting.

Separate investigations were launched in February 2017 and June 2017 to assess if certain online sales practices are preventing, in breach of EU antitrust rules, consumers from enjoying cross-border choice and from being able to buy products and services online at competitive prices. The Commission adds that those investigations are ongoing.

Commenting on today’s EC decision, a spokesman for Philips told us: “Since the start of the EC investigation in late 2013, which Philips reported in its Annual Reports, the company has fully cooperated with the EC. Philips initiated an internal investigation and addressed the matter in 2014.”

“It is good that we can now leave this case behind us, and focus on the positive impact that our products and solutions can have on people,” he added. “Let me please stress that Philips attaches prime importance to full compliance with all applicable laws, rules and regulations. Being a responsible company, everyone in Philips is expected to always act with integrity. Philips rigorously enforces compliance of its General Business Principles throughout the company. Philips has a zero tolerance policy towards non-compliance in relation to breaches of its General Business Principles.”

Anticipating the decision of the EC, he said the company had already recognized a 30M provision in its Q2 2018.

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