DailyTech - Google Gets Served With FTC Subpoenas in Android Abuse Investigation

Submit News

Gadgets Google Gets Served With FTC Subpoenas in Android Abuse Investigation
Jason Mick (Blog) - August 11, 2011 7:41 AM

33 comment(s) - last by Tony Swash.. on Aug 12 at 3:40 AM

Google stands accused of using its Android smart phone market giant to crush the competition. (Source: AP Photo)

Is Google abusing its dominant position to proselytize its services?

The world's most popular smartphone operating system, Google Inc.'s (GOOG) Android OS, can't seem to catch a break these days. If its not being attacked in court [1][2][3][4][5] by rival smartphone maker Apple, Inc. (AAPL) whose looking to forcibly remove its products from market [1][2] with lawsuits, it's being probed by antitrust investigators.

The U.S. Federal Trade Commission on Wednesday issued long awaited subpoenas. For those of you who aren't lawyers and haven't been dragged through a major court case, a "subpoena" is a government demand for testimony or evidence. Failure to give the requested information can result in criminal and/or civil penalties.

The fact that the U.S. government has issued subpoenas shows that it's getting serious about its investigation of Google. A Google spokeswoman seemed nonchalant, commenting, "We understand that with success comes scrutiny. We're happy to answer any questions they have about our business."

But for all the cheer, the move is a major concern for Google.

Several small smartphone service providers have claimed that Google applied pressure to its hardware partners to boot their products off their smartphones, in favor of Google's rival services. In and of itself, that might not be illegal were, Google not by far the industry's most dominant player in sales. Android is reportedly outselling the next closest company, Apple, 5-to-2 in recent figures. Thus if Google is found guilty of the allegations, it could face stiff penalties for violating antitrust laws.

Other allegations against Google include reports that it stole data from other services, such as reviews site Yelp and used it to bolster its own offerings. And Google also stands of artificially boosting its services above competitors' in the results from its search engine -- the most used search engine on the planet.

The issue of the subpoenas was first reported by The Wall Street Journal. Even if Google can beat the antitrust rap in the U.S. it faces similar accusations in Europe, a place known for its strict antitrust laws [1][2].

Google has set aside $500M USD in cash to cover possible antitrust penalties. The question is whether that will be close to enough.

Comments

Threshold

Username
Password
remember me

This article is over a month old, voting and posting comments is disabled

like Intel?

By 85 on 8/11/2011 8:07:47 AM , Rating: 2

So they allegedly did the same thing that Intel got busted for a few years ago? I'm really not a fan of business like this.

RE: like Intel?

By kleinma on 8/11/2011 9:20:12 AM , Rating: 2

You have to wonder how innocent a company can possibly be when they set aside half a billion dollars to cover potential costs. Sure smells a bit like guilt to me...

Parent

RE: like Intel?

By someguy123 on 8/11/2011 4:22:42 PM , Rating: 2

To be fair, lawyers are bloodsuckers and cost unbelievable amounts of money. Even if you're innocent you'll still need to pay for litigation, which is why most companies settle as quickly as possible on smaller claims to avoid paying out the nose for lawyers.

Parent

RE: like Intel?

By 2ManyOptions on 8/11/2011 9:30:47 AM , Rating: 3

Completely agree that any organization involved in unfair practice should be penalized. But I can't stop wondering when companies like Apple get patents on pretty much something which 'looks like a tablet'. Maybe it should fall under unfair patent or something.

Parent

RE: like Intel?

By ltcommanderdata on 8/11/2011 9:52:40 AM , Rating: 2

Are you saying that if the Patent Office grants Apple or other companies an "unfair patent", the recipient should be the one penalized? Rather than the Patent Office needing to review it's practices?

Parent

RE: like Intel?

By 2ManyOptions on 8/11/2011 11:13:36 AM , Rating: 2

Yeah, patent system/office is c ertainlythe one that needs scrutiny. Also, tells a thing or two about the company applying for patent. More than innovation patents seem to be filed for covering what is obvious that WILL be violated by any competitor in the course of bringing a similar product out.
I am not terming Apple products to be non-innovative, some of it's patents seem to be so.

Parent

RE: like Intel?

By michael2k on 8/11/2011 9:59:14 AM , Rating: 2

Patents can be reviewed and overturned. There's a process in place. Apple is, thus far, in the clear for enforcing the patents and IP it's been granted.

Parent

RE: like Intel?

By Samus on 8/11/2011 1:35:19 PM , Rating: 2

The difference is Intel had direct "compatible" competition: AMD.

Google's Android has no competition. Apple iOS is a closed system and is not licensed. Palm OS was licensed until it was replaced by WebOS, which like iOS, is not licensed beyond Palm (not HP) devices. Windows Mobile licensing fees were high and lets face it, offered a pretty crappy experience for most users.

Android
a) open source
b) has no license agreement
c) free
d) modern
e) compatible with virtually all hardware

There is no other option that offers more than one of those features to manufactures.

HTC dumped Windows Mobile in favor of Android, but is not using Windows Phone 7. The same goes for Samsung, who before Android, depended on their own internal operating system development much like Motorola, LG, etc. Obviously Android was the most attractive alternative, because it was the only alternative.

This subpoena has Apple written all over it. There is no basis for it. There was no reason for Google to pressure their partners to use Android over the competition, because there is no competition.

I'm sure Google is as crooked as every other large company, but this is as frivilous as the Apple patent wars, and comparing Google strongarming to Intel strongarming is ridiculous and have virtually no comparison.

Parent

RE: like Intel?

By Samus on 8/11/2011 1:37:06 PM , Rating: 2

Replace all my 'not' with 'now'

Something happened with my spell check there...

Parent

RE: like Intel?

By NellyFromMA on 8/11/2011 2:51:38 PM , Rating: 2

It's a little bit more than simply the smartphone OS or device.... It's the inappropriate leveraging of their position as a whole ultimately.

Parent

RE: like Intel?

By someguy123 on 8/11/2011 4:28:50 PM , Rating: 2

It's freedom to be manipulated is more of a benefit of the GPL than part of google's marketing. regardless of its open nature, people are claiming that google demanded other OS's be removed from smaller phone manufacturer's product lines. even if the feature list isn't in direct competition to closed platforms, it's still in google's best interest to increase android saturation vs licensed OSs, as google makes money from the search/tracking on android devices.

Parent

RE: like Intel?

By michael2k on 8/11/2011 7:12:33 PM , Rating: 2

Did you miss this in the article?
"smartphone service providers"

So... AGPS, maps, search, music, movies, email... anything that would compete with Google, basically.

For example, Google more or less crushed Skyhook:
http://www.engadget.com/2011/05/10/internal-emails...

That would be a smartphone service provider that Google would probably face antitrust inquiries about.

Parent

RE: like Intel?

By superPC on 8/11/2011 9:52:27 AM , Rating: 2

this only proves that old adage: power corrupts absolute power corrupts absolutely. intel has tasted it, MS has tasted it, now it's google's turn and next facebook. one has to wonder though how can apple manages to stay away from this kind of scrutiny? i guess image really is everything nowadays (apple image as the perpetual underdog).

Parent

RE: like Intel?

By xype on 8/12/2011 2:53:25 AM , Rating: 2

Apple is making its own hardware and software. They can hardly force themselves to only sell Apple computers running Apple software, since they are doing so by design. Apple also isn’t forcing manufacturers to only manufacture their hardware or phone carriers to only carry iPhones. At best, they buy options for manfacturing capacities by giving the manufacturers huge piles of money in advances.

On the other hand, Apple is very agressive with their IP and is going to play the Patent System for all its worth. But that’s not really illegal, is it?

Parent

Not rea!**

By sprockkets on 8/11/2011 10:41:03 AM , Rating: 1

quote:
In and of itself, that might not be illegal were, Google not by far the industry's most dominant player in sales. Android is reportedly outselling the next closest company, Apple, 5-to-2 in recent figures. Thus if Google is found guilty of the allegations, it could face stiff penalties for violating antitrust laws.

Google's latest market share is around what, 25%, then apple is like what 23% and BB at around another 23%? They don't have any dominant share of the market period.

There are plenty of choices to pick from.

RE: Not rea!**

By kraeper on 8/11/2011 11:56:10 AM , Rating: 2

Not only that, but:

quote:
And Google also stands <accused?> of artificially boosting its services above competitors' in the results from its search engine

is hilarious. It's their search engine, they can do with it as they'd like. It's private property. And to NOT use that much web traffic to your own advantage would be stupid. There is no constitutional clause that all internet search results must be entirely neutral.

Parent

RE: Not rea!**

By michael2k on 8/11/2011 7:17:05 PM , Rating: 2

Last I heard, Google was 38% to Apple's 18%:
http://www.idc.com/getdoc.jsp?containerId=prUS2287...

Parent

lol

By Spikesoldier on 8/11/2011 2:20:48 PM , Rating: 3

just because one company charges 5x more than they should for essentially the 'same product', doesnt mean that the guy charging the right price is being 'anti-competitive'.

just sayin'

RE: lol

By michael2k on 8/11/2011 7:15:07 PM , Rating: 2

Yeah, but this counts as being anticompetitive, no?
http://www.engadget.com/2011/05/10/internal-emails...

Parent

Android Abuse Investigation?

By kattanna on 8/11/2011 10:19:38 AM , Rating: 2

am i the only one who read that headline and thought just what are those zany japanese doing now?

;>)

Where is Google going?

By Tony Swash on 8/11/11, Rating: -1

By Tony Swash on 8/11/2011 9:57:52 AM , Rating: -1

Google often seems to me to be a company bereft of strategic common sense. If you manage a big corporation, especially one like Google which is dependent on essentially one source of income, it would seem common sense to try to carefully diversify one's revenue generating products and services, try to avoid unnecessary fights with too many competitors at once and to try to build some useful long term alliances. Google seem to do the opposite of this. What's so startling about Google's overall pattern of initiatives, projects and product launches is how so many seem to be designed to pick big fights with leading tech companies, designed to actually attack the business model of many tech companies, whilst making absolutely no money for Google. This seems to me senseless and reckless. Why do this sort of stuff?

To take one big example, it has always puzzled me as to why Google decided to do Android and why they chose to do it like they did. Obviously the rise of the post-PC mobile internet device world could pose some threats to Google's sole money earner which is selling search related advertising, and it does seem that in the new mobile device world search related advertising doesn't do too well. This is compounded by the rise of the app paradigm, and the threat that once the majority of people are accessing internet services via apps instead of browsers Google could be shut out. Google was right to try to plan for these changes. It's just that I can't see how Android has addressed these changes and threats, or even how Android has been strategically good for Google in any way.

It's true Google has built a sort of relationship with several hand set and device OEMs but it's not a close or strategic relationship, and if Android ends up costing more than WP7 all those fair weather friends will vanish very quickly.

I think they drifted into the ridiculous Android adventure partly through hubris and partly through poor corporate governance and poor leadership. Google will end up paying a very high price for Android. It's a shame really - they seemed so interesting for a while, perhaps a force for good and then they let themselves fall into being a sort of poor mans Microsoft V2 only without the gravity or clout. If you set out to seriously attack the business of most of the major large tech companies with products you don't actually make any money on you end up making some very powerful enemies for no good reason. Madness.

Prior to Android (or more accurately prior to the decision to reset the Android design so as to clone iPhone instead of Blackberry) Google had a very solid seeming alliance with Apple, Eric Schmidt was invited onto the Apple board and Google services were built deep into iOS from the its launch.

Maybe Google feared Apple would shut them out, maybe they thought Microsoft might beat iPhone and shut Google out. Maybe they just didn't think very clearly at all. But the up shot was that the embrace of Android, the cloning of iOS, the deliberate and provocative anti-Apple rhetoric at Google's IO in 2010 all meant that Apple went very quickly from being an ally to being an enemy.

Now I am not trying to turn this into a comment about Apple and Google but rather to use the deliberate breaking of the Alliance with Apple as an example of how profoundly Android effected and changed Googles strategic direction. And for why? Google don't make money from Android, Google is still faced with the same conundrum of how to adapt its business model to the new mobile paradigm, Android users are no more likely to use Google search than are iOS users.

So frankly I am at loss when I try to understand where Google thinks it is going. Maybe 'it' doesn't think at all, maybe there is no 'it', maybe there are really many Google's, lots of decision making centres, all building their favourite hobby horse projects with no thought as to the broader strategic implications. I sometimes get sense that Google often get's pulled down roads which lead to places they probably wouldn't have wanted to go to in the first place. Places where they find themselves doing evil for noble ideals. Maybe Google is just like a socially awkward autistic savant, both brilliant and utterly inept at the same time. It's certainly interesting to watch.

RE: Where is Google going?

By sprockkets on 8/11/2011 10:18:11 AM , Rating: 2

So, in summary, FUD

Parent

RE: Where is Google going?

By Tony Swash on 8/11/11, Rating: -1

RE: Where is Google going?

By 2ManyOptions on 8/11/2011 11:19:50 AM , Rating: 2

Google everywhere. Possibly that's their goal.
You are missing Microsoft here, apart from Apple, this will be a direct assault on Windows phone OS and so far they are successful and way ahead of them - this would also gives them ability to integrate Google search wherever needed in the mobile space, something Microsoft could do with Bing thus taking/defending that piece of market share.

Parent

RE: Where is Google going?

By Xcpus on 8/11/2011 8:07:41 PM , Rating: 2

No offense Tony but nearly all your posts lack logic. I mean what else would one expect from a fanboi. There is no logic when one holds an irrational attachment to one particular Corporate image.

You spin anything in Apple's favor just like a Bill O'Reilly segment.

I care not for Google, Apple, Microsoft etc. I just care about competition leading to better prices for consumers. I care about the average citizen getting a better deal through stiff but rational/reasonable degrees of competition.

I think that IP needs to be re-written and a balance found. I think that if a company does not physically bring an idea to life then its patent ought to be ignored. And even if a company brings an idea to life that idea must be truly creative and original and we can find methods to quantify this based on "precedence". Is it a revolutionary product or a logical evolutionary extension of other existing ideas?

Anyway... your posts are rarely informative and rarely offer any sort of insight. I just hope you know that to anyone NOT an Apple fanboi you sound irrational. Whether it is a Google/Microsoft Fan or a Neutral person such as myself.

Maybe seek counseling or something.

Parent

RE: Where is Google going?

By Tony Swash on 8/12/2011 3:40:46 AM , Rating: 2

My post isn't about Apple it's about Google, about which I guess you have nothing to say.

Parent

RE: Where is Google going?

By kraeper on 8/11/2011 11:57:02 AM , Rating: 1

In summary, TLDR, and QQ moar.

Parent

RE: Where is Google going?

By FeralMisanthrope on 8/11/2011 11:46:51 AM , Rating: 2

Google is attempting to capitalize on the inevitable commoditization and democratization of mobile computing. Before Android, smartphones were a lot like the IBM mainframes of old--proprietary hardware/software combinations that allow companies like Apple and RIM to drive high margins through vertical integration and customer lock-in. In a way, Google is trying to do for mobile devices what Microsoft did for the PC. Unlike Microsoft, Google monetizes its consumer products and services indirectly. I think it's still too early to tell if Android will be strategically good for Google. Aside from crowding out some noteworthy competitors like MeeGo and WebOS, Android has been huge win for consumers, developers, device manufacturers, service providers, and mobile computing in general. I doubt that I would even own a smartphone if not for Android, and I'm not the only one.

P.S. I really like your comparison of Google to an autistic savant! Of all the psychological maladies that can be used to describe a corporation, Asperger syndrome is certainly not the worst.

Parent

RE: Where is Google going?

By vision33r on 8/11/2011 12:39:20 PM , Rating: 2

Android is a large win for Asia as they were severely behind in the software engineering area. Android gave them a free mobile OS to use to go head to head against RIM, Apple, and Microsoft.

It's only a huge win for the US Carriers selling data plans. Very few American or European businesses are capitalizing on Android as much as Asia.

Parent

RE: Where is Google going?

By Tony Swash on 8/11/2011 1:54:39 PM , Rating: 1

I see some interesting responses to my comment but none address my key question. The question was not is Android a good thing, is it good for handset makers, is it good for consumers. The question is: is Android good for Google? And if it is - how?

As far as I can see even if every smart phone on the planet was Android, iPhone and WP7 crushed, it still wouldn't generate extra revenue for Google. It wouldn't solve Google's strategic problems with the post PC world. Google actually makes more per capita per iOS user than per Android user but both rates of revenue are much lower than per desktop user. So if in five years the web is the mobile device web and not the desktop web then Android will do nothing about solving the revenue resulting problems that that will cause Google.

Parent

RE: Where is Google going?

By AmbroseAthan on 8/11/2011 4:18:06 PM , Rating: 2

This was some good commentary on Android's purpose and business sense:

http://abovethecrowd.com/2011/03/24/freight-train-...

And here is some of the money analysis:

http://searchenginewatch.com/article/2050037/Andro...

Parent

RE: Where is Google going?

By sprockkets on 8/11/2011 7:55:51 PM , Rating: 2

Dude, you aren't asking a question - you are posting a bunch of rhetorical nonsense meant to be posed as a question but with the effect of FUD. I see through it, and so do others.

You aren't genuinely asking for an answer, but if you were, the one you need is

GFY!

Parent

RE: Where is Google going?

By acer905 on 8/11/2011 12:41:52 PM , Rating: 1

There is one point that I must contest. Yes, the design of Android was changed after the the success of iOS, however it was not to directly clone it. Instead, the design change was to take advantage of the shift in user interface metrics. The iPhone showed that people would accept a device with nothing but a screen to interact with. Prior to that, touch screen devices were gimmicks.

The interface on stock android has always been different from iOS. Samsung chose to use TouchWiz, which was heavily modeled on iOS instead of stock, much like HTC uses Sense. However, neither are Google's fault. The interface on the Nexus S, much like that of the Nexus One before it, and going back to the old HTC Dream, are all significantly different than iOS. The only change from the original design was a switch to full front touch screen.

Parent

"Mac OS X is like living in a farmhouse in the country with no locks, and Windows is living in a house with bars on the windows in the bad part of town." -- Charlie Miller