Last year, Google committed to make political advertising more transparent. This week, we’re rolling out new policies for U.S. election ads across our platforms as we work to meet those commitments.As a first step, we’ll now require additional verifica…
We’ve all seen lots of articles about the future of work in today’s rapidly changing economy. Too often, the loudest voices propose just one of two visions for the future. Either globalization and technology will eliminate quality jobs, or we’ll adapt …
In 2007, we launched Android, a free and open-source operating system. Smartphones back then were an expensive rarity. We wanted to change that — to stimulate innovation and increase choice for consumers — and it worked.
Android means manufacturers don’t have to buy or build expensive mobile operating systems. As a result, smartphones are now available at dramatically lower prices — as little as 45 euros — and have become much more accessible to many more people. Today, more than 24,000 devices from over 1,300 brands run on Android. And European developers are able to distribute their apps to over a billion people around the world. Android is not a ‘one way street’; it’s a multi-lane highway of choice.
Last April, the European Commission issued a Statement of Objections raising concerns over how we manage Android compatibility and distribute our own apps. The response we filed today shows how the Android ecosystem carefully balances the interests of users, developers, hardware makers, and mobile network operators. Android hasn’t hurt competition, it’s expanded it.
First, the Commission’s case is based on the idea that Android doesn’t compete with Apple’s iOS. We don’t see it that way. We don’t think Apple does either. Or phone makers. Or developers. Or users. In fact, 89% of respondents to the Commission’s own market survey confirmed that Android and Apple compete. To ignore competition with Apple is to miss the defining feature of today’s competitive smartphone landscape.
Second, we are concerned that the Commission’s preliminary findings underestimate the importance of developers and the dangers of fragmentation in a mobile ecosystem. Developers — and there were at least 1.3 million of them in Europe in 2015 — depend on a stable and consistent framework to do their work. Any phone maker can download Android and modify it in any way they choose. But that flexibility makes Android vulnerable to fragmentation, a problem that plagued previous operating systems like Unix and Symbian. When anyone can modify your code, how do you ensure there’s a common, consistent version of the operating system, so that developers don’t have to go through the hassle and expense of building multiple versions of their apps?
To manage this challenge, we work with hardware makers to establish a minimum level of compatibility among Android devices. Critically, we give phone makers wide latitude to build devices that go above that baseline, which is why you see such a varied universe of Android devices. That’s the key: our voluntary compatibility agreements enable variety while giving developers confidence to create apps that run seamlessly across thousands of different phones and tablets. This balance stimulates competition between Android devices as well as between Android and Apple’s iPhone.
Android’s compatibility rules help minimize fragmentation and sustain a healthy ecosystem for developers. Ninety-four percent of respondents who answered questions on fragmentation in a Commission market survey said that it harms the Android platform. Developers worry about it, and our competitors with proprietary platforms (who don’t face the same risk) regularly criticize us for it. The Commission’s proposal risks making fragmentation worse, hurting the Android platform and mobile phone competition.
Third, the Commission argues that we shouldn’t offer some Google apps as part of a suite. No manufacturer is obliged to preload any Google apps on an Android phone. But we do offer manufacturers a suite of apps so that when you buy a new phone you can access a familiar set of basic services. Android’s competitors, including Apple’s iPhone and Microsoft’s Windows phone, not only do the same, but they allow much less choice in the apps that come with their phones. On Android, Google’s apps typically account for less than one-third of the preloaded apps on the device (and only a small fraction of device memory). A consumer can swipe away any of our apps at any time. And, uniquely, hardware makers and carriers can pre-install rival apps right next to ours. In competition-speak, that means there’s no “foreclosure”.
There’s also plenty of evidence that consumers can easily choose which apps they want — something the Commission has recognized in other investigations. The average Android user in Europe downloads an additional 50 apps over the lifetime of their device. Downloading and replacing an app or widget is simple — you can do it in thirty seconds. Users downloaded 65 billion apps from Google Play in 2015 — an average of more than 175 million apps a day. Since 2011, apps offering similar functionality to those in our suite have been downloaded almost 15 billion times. Again, there’s no evidence of foreclosure.
Many pre-installed apps don’t succeed, and many have been extremely successful through user downloads — think of Spotify or Snapchat. Our apps suite approach explicitly preserves users’ freedom to choose the apps they want on their phones.
Finally, distributing products like Google Search together with Google Play permits us to offer our entire suite for free — as opposed to, for example, charging upfront licensing fees. This free distribution is an efficient solution for everyone — it lowers prices for phone makers and consumers, while still letting us sustain our substantial investment in Android and Play.
Today’s mobile devices show all the signs of fierce competition with a wide range of business models: from vertically integrated ones like Apple’s iOS to open-source systems like Android. The rapid innovation, wide choice, and falling prices we see in smartphones represent the hallmarks of robust competition.
Android has unleashed a new generation of innovation and inter-platform competition. By any measure, it is the most open, flexible, and differentiated of the mobile computing platforms.
But open-source platforms are fragile. They survive and grow by balancing the needs of all participants, including users and developers. The Commission’s approach would upset this balance, and send an unintended signal favouring closed over open platforms. It would mean less innovation, less choice, less competition, and higher prices. That wouldn’t be just a bad outcome for us. It would be a bad outcome for developers, for phone makers and carriers, and, most critically, for consumers.
That’s the case we are making to the Commission in our filing today. We look forward to continuing the dialogue.
For more Android facts, visit android.com/everyone
When you search for something on Google, we try to provide you the highest quality information we can. Our engineers are constantly experimenting to find better ways to connect you with useful information, and, increasingly, to provide direct answers to your questions.
We take that same approach to online shopping searches. If you’re looking to buy a <coffee machine> or a <cast iron pan>, we want to connect you directly to merchants who sell them, whether that’s through organic links or ads. In recent years, we’ve improved the format of our ads to include more informative displays with pictures, prices, and links where you can buy products. Showing more useful ads benefits us, our advertisers, and most of all, you, our users.
That’s why we disagree with the European Commission’s argument that our improved Google Shopping results are harming competition. As we said last year in our response to the Commission’s original Statement of Objections (SO), we believe these claims are wrong as a matter of fact, law, and economics.
The Commission’s original SO drew such a narrow definition around online shopping services that it even excluded services like Amazon. It claimed that when we offered improved shopping ads to our users and advertisers, we were “favouring” our own services — and that this was bad for a handful of price comparison aggregators who claimed to have lost clicks from Google. But it failed to take into account the competitive significance of companies like Amazon and the broader dynamics of online shopping.
Our response demonstrated that online shopping is robustly competitive, with lots of evidence supporting the common-sense conclusion that Google and many other websites are chasing Amazon, by far the largest player on the field.
We then showed that our improved ads were helpful to users and merchants. We never compromised the quality or relevance of the information we displayed. On the contrary, we improved it. That isn’t “favouring” — that’s listening to our customers.
This summer, the Commission sent us a revised version of its case called a Supplementary Statement of Objections. The Commission’s new filing didn’t offer a new theory, but argued that because sites like Amazon sometimes pay price comparison aggregator sites for referred traffic, they can’t also be considered rivals. But many companies simultaneously compete and cooperate. And in fact Amazon gets only a tiny fraction of its traffic from these services, hardly enough to support the idea they don’t compete with price comparison sites and a range of other internet shopping services.
Our second response, filed today, shows that the Commission’s revised case still rests on a theory that just doesn’t fit the reality of how most people shop online. Consumers don’t just look for products on a search engine, then click on a price comparison site, and then click again to visit merchant sites. They reach merchant websites in many different ways: via general search engines, specialist search services, merchant platforms, social-media sites, and online ads served by various companies. And of course merchants are reaching consumers directly like never before. On the mobile web — and more than half of Europe’s Internet traffic is mobile these days — dedicated apps are the most common way for consumers to shop.
While there’s no indication that the Commission ever surveyed consumers, the evidence is clear: consumers can and do click anywhere and navigate to any site they choose. All of these services — search engines, price comparison sites, merchant platforms, and merchants — compete with each other in online shopping. That’s why online shopping is so dynamic and has grown so much in recent years.
In the year-and-a-half since the Commission’s original filing, we’ve seen even more data confirming this. For example, a recent study shows that for many German online shoppers, Amazon is the first port of call on the web. A third of online consumers first go to Amazon, irrespective of where they ultimately make their purchases. Only 14.3% go first to Google, and only 6.7% to price comparison sites. A recent US study shows similar results: 55% of US consumers start their online shopping on Amazon, 28% on search engines, and 16% go straight to individual retailers.
The Commission also claims consumers don’t go to Amazon to compare product features and prices. But Amazon provides tools to do exactly that, plus the ability to buy products and have them delivered the next day, which makes Amazon an even stronger competitor. It’s not surprising that when Amazon and other new competitors arrived in European countries, traffic to sites offering only price-comparison went down.
As the market changes, there are inevitably shifts among competitors. The data show that the handful of price comparison sites who’ve filed competition complaints don’t reflect the wider marketplace. There are hundreds of shopping comparison sites and over the past ten years, some gained traffic, others lost traffic. Some exited the market, others entered. This kind of dynamic competition is undeniable. Online advertising is evolving rapidly, with companies like Facebook, Pinterest, and many others re-inventing what it means to connect merchants with consumers.
There is simply no meaningful correlation between the evolution of our search services and the performance of price comparison sites. Meanwhile, over those same ten years, a rapidly increasing amount of traffic flowed from our search pages to popular sites like Amazon and eBay as they expanded in Europe, hardly a sign of our “favouring” our own ads.
The Commission’s revised filing suggests we shouldn’t use specialized algorithms to highlight what we consider to be the most relevant merchants’ ads for our users, but should instead highlight ads from price comparison sites. But we get feedback from our users every time they use our services and their clicks tell us that this just isn’t how they want to shop. Forcing us to direct more clicks to price comparison aggregators would just subsidize sites that have become less useful for consumers.
Ultimately, we can’t agree with a case that lacks evidence and would limit our ability to serve our users, just to satisfy the interests of a small number of websites. But we remain committed to working with the Commission in hopes of resolving the issues raised, and we look forward to continuing our discussions.
Today we have also filed our response to the Commission’s concerns about our advertising service AdSense for Search, and in the days to come we will respond to the Statement of Objections about our Android operating system. These cases involve different claims and different substantive questions, but similarly cite just a few complaints to justify broad legal claims.
We’re confident these cases will ultimately be decided based on the facts and that this analysis will show our product innovations have benefited consumers and merchants, and expanded competition. The surest signs of dynamic competition in any market are low prices, abundant choices, and constant innovation — and that’s a great description of shopping on the internet today.
If we want the internet to continue to thrive, we need to make sure that the right people are in a position to drive its future growth.