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July 18, 2018
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Google gets slapped $5BN by EU for Android antitrust abuse

in Advertising Tech/Android/antitrust/Apps/competition commission/Delhi/eu/Europe/fairsearch/Google/Government/India/Margrethe Vestager/mobile/Politics/TC by

Google has been fined a record breaking €4.34 billion (~$5BN) by European antitrust regulators for abusing the dominance of its Android mobile operating system.

Competition commissioner Margrethe Vestager has tweeted to confirm the penalty ahead of a press conference about to take place. Stay tuned for more details as we get them.

In a longer statement about the decision, Vestager said: “Today, mobile internet makes up more than half of global internet traffic. It has changed the lives of millions of Europeans. Our case is about three types of restrictions that Google has imposed on Android device manufacturers and network operators to ensure that traffic on Android devices goes to the Google search engine. In this way, Google has used Android as a vehicle to cement the dominance of its search engine. These practices have denied rivals the chance to innovate and compete on the merits. They have denied European consumers the benefits of effective competition in the important mobile sphere. This is illegal under EU antitrust rules.”

In particular, the EC has decided that Google:

  • has required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google’s app store (the Play Store);
  • made payments to certain large manufacturers and mobile network operators on condition that they exclusively pre-installed the Google Search app on their devices; and
  • has prevented manufacturers wishing to pre-install Google apps from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google (so-called “Android forks”).

The decision also concludes that Google is dominant in the markets for general internet search services; licensable smart mobile operating systems; and app stores for the Android mobile operating system.

Google has tweeted an initial reaction to the decision, claiming Android has created “a vibrant ecosystem, rapid innovation and lower prices”.

A company spokesperson also confirmed to us it will appeal the Commission’s decision.

This story is developing… refresh for updates… 

The fine is the second major penalty for the ad tech giant for breaching EU competition rules in just over a year — and the highest ever issued by the Commission for abuse of a dominant market position.

In June 2017 Google was hit with a then-record €2.4BN (~$2.7BN) antitrust penalty related to another of its products, search comparison service, Google Shopping. The company has since made changes to how it displays search results for products in Europe.

According to the bloc’s rules, companies can be fined 10 per cent of their global revenue if they are deemed to have breached European competition law.

Google’s parent entity Alphabet reported full year revenue of $110.9 billion in 2017. So the $5BN fine is around half of what the company could have been on the hook for if EU regulators had levied the maximum penalty possible.

The Commission said the size of the fine takes into account “the duration and gravity of the infringement”. It also specified it had been calculated on the basis of the value of Google’s revenue from search advertising services on Android devices in the European Economic Area (per its own guidelines on fines).

Google will have three months to pay the fine but is likely to appeal — and legal wrangling could drag the process out for many years. (Although if it does not pay the fine within that timeframe penalty payments of up to 5% of the average daily worldwide turnover of the company can be applied.)

Prior to the Commission’s record pair of fines for Google products, its next highest antitrust penalty is a €1.06BN antitrust fine for chipmaker Intel all the way back in 2009.

Yet only last year Europe’s top court ruled that the case against Intel — which focused on it offering rebates to high-volume buyers — should be sent back to a lower court to be re-examined, nearly a decade after the original antitrust decision. So Google’s lawyers are likely to have a spring in their step going into this next European antitrust battle.

The latest EU fine for Android has been on the cards for more than two years, given the Commission’s preliminary findings and consistently prescriptive remarks from Vestager during the course of what has been a multi-year investigation process.

And, indeed, given multiple EU antitrust investigations into Google businesses and business practices (the EU has also been probing Google’s AdSense advertising service).

The Commission’s prior finding that Google is a dominant company in Internet search — a judgement reached at the culmination of its Google Shopping investigation last year — is also important, making the final judgement in the Android case more likely because the status places the onus on Google not to abuse its dominant position in other markets, adjacent or otherwise.

Announcing the Google Shopping penality last summer, Vestager made a point of emphasizing that dominant companies “need to be more vigilant” — saying they have a “special responsibility” to ensure they are not in breach of antitrust rules, and also specifying this applies “in the market where it’s dominant” and “in any other market”. So that means — as here in the Android case — in mobile services too.

While a one-off financial penalty — even one that runs to so many billions of dollars — cannot cause lasting damage to a company as wealthy as Alphabet, of greater risk to its business are changes the regulators can require to how it operates Android which could have a sustained impact on Google if they end up reshaping the competitive landscape for mobile services.

At least that’s the Commission’s intention: To reset what has been judged an unfair competitive advantage for Google via Android, and foster competitive innovation because rival products get a fairer chance to impress consumers.

However the popularity and profile of Google services suggests that even if Android users are offered a choice as a result of an EU antirust remedy — such as of which search engine, maps service, mobile browser or even app store to use — most will likely pick the Google-branded offering they’re most familiar with.

That said, an antitrust remedy could have the chance to shift consumers’ habits over time — if, for instance, OEMs start offering Android devices that come preloaded with alternative mobile services, thereby raising the visibility of non-Google apps and services.

Interestingly, Google has been striking deals with Chinese OEMs in recent months — to brings its ARCore technology to markets where its core services are censored and its Play Store is restricted. And its strategy to workaround regional restrictions in China by working more closely with device makers may also be part of a plan to hedge against fresh regulatory restrictions being placed on Android elsewhere. 

Although complainants in the EU’s earlier Google Shopping antitrust case continue to express displeasure with the outcome on that front. And in a statement responding to news that another EU antitrust penalty was incoming for Android, Shivaun Raff, CEO of Foundem, the lead complainant in Google Shopping case, said: “Fines make headlines. Effective remedies make a difference.”

So the devil will be in the detail of the remedies.

 

Android as an antitrust ‘Trojan horse’

The European Commission announced its formal in-depth probe of Android in April 2015, saying then that it was investigating complaints Google was “requiring and incentivizing” OEMs to exclusively install its own services on devices on Android devices, and also examining whether Google was hindering the ability of smartphone and tablet makers to use and develop other OS versions of Android (i.e. by forking the open source platform).

Rivals — banding together under the banner ‘FairSearch‘ — complained Google was essentially using the platform as a ‘Trojan horse’ to unfairly dominate the mobile web. The lobby group’s listing on the EU’s transparency register describes its intent as promoting “innovation and choice across the Internet ecosystem by fostering and defending competition in online and mobile search within the European Union”, and names its member organizations as: Buscapé, Cepic, Foundem, Naspers, Nokia, Oracle, TripAdvisor and Yroo.

On average, Android has around a 70-75% smartphone marketshare across Europe. But in some European countries the OS accounts for an even higher proportion of usage. In Spain, for example, Android took an 86.1% marketshare as of March, according to market data collected by Kantar Worldpanel.

In recent years Android has carved an even greater market share in some European countries, while Google’s Internet search product also has around a 90% share of the European market, and competition concerns about its mobile OS have been sounded for years.

Last year Google reached a $7.8M settlement with Russian antitrust authorities over Android — which required the company to no longer demand exclusivity of its applications on Android devices in Russia; could not restrict the pre-installation of any competing search engines and apps, including on the home screen; could no longer require Google Search to be the only general search engine pre-installed.

Google also agreed with Russian antitrust authorities that it would no longer enforce its prior agreements where handset makers had agreed to any of these terms. Additionally, as part of the settlement, Google was required to allow third parties to include their own search engines into a choice window, and to allowing users to pick their preferred default search engine from a choice window displayed in Google’s Chrome browser. The company was also required to develop a new Chrome widget for Android devices already being used in Russia, to replace the standard Google search widget on the home screen so they would be offered a choice when it launched.

A year after Vestager’s public announcement of the EU’s antitrust probe of Android, she issued a formal Statement of Objections, saying the Commission believed Google has “implemented a strategy on mobile devices to preserve and strengthen its dominance in general Internet search”; and flagging as problematic the difficulty for Android users whose devices come pre-loaded with the Google Play store to use other app stores (which cannot be downloaded from Google Play).

She also raised concerns over Google providing financial incentives to manufacturers and mobile carriers on condition that Google search be pre-installed as the exclusive search provider. “In our opinion, as we see it right now, it is preventing competition from happening because of the strength of the financial incentive,” Vestager said in April 2016.

Google was given several months to respond officially to the antitrust charges against Android — which it finally did in November 2016, having been granted an extension to the Commission’s original deadline.

In its rebuttal then, Google argued that, contrary to antitrust complaints, Android had created a thriving and competitive mobile app ecosystem. It further claimed the EU was ignoring relevant competition in the form of Apple’s rival iOS platform — although iOS does not hold a dominant marketshare in Europe, nor Apple have a status as a dominant company in any EU markets.

Google also argued that its “voluntary compatibility agreements” for Android OEMs are a necessary mechanism for avoiding platform fragmentation — which it said would make life harder for app developers — as well as saying its requirement for Android OEMs to use Google search by default is effectively its payment for providing the suite for free to device makers (given there is no formal licensing fee for Android).

It also couched “free distribution is an efficient solution for everyone” — arguing it lowers prices for phone makers and consumers, while “still letting us sustain our substantial investment in Android and Play”.

In addition, Google sought to characterize open source platforms as “fragile” — arguing the Commission’s approach risked upsetting the “balance of needs” between users and developers, and suggesting their action could signal they favor “closed over open platforms”.

News Source = techcrunch.com

Dems and GOP unite, slamming Facebook for allowing violent Pages

in Apps/Censorship/conspiracy theories/Delhi/Facebook/fake news/Google/Government/house of representatives/India/infowars/Opinion/Policy/Politics/Social/YouTube by

In a rare moment of agreement, members of the House Judiciary Committee from both major political parties agreed that Facebook needed to take down Pages that bullied shooting survivors or called for more violence. The hearing regarding social media filtering practices saw policy staffers from Facebook, Google and Twitter answering questions, though Facebook absorbed the brunt of the ire. The hearing included Republican Representative Steve King ask “What about converting the large behemoth organizations that we’re talking about here into public utilities?”

The meatiest part of the hearing centered on whether social media platforms should delete accounts of conspiracy theorists and those inciting violence, rather than just removing the offending posts.

The issue has been a huge pain point for Facebook this week after giving vague answers for why it hasn’t deleted known faker Alex Jones’ Infowars Page, and tweeting that “We see Pages on both the left and the right pumping out what they consider opinion or analysis – but others call fake news.” Facebook’s Head of Global Policy Management Monica Bickert today reiterated that “sharing information that is false does not violate our policies.”

As I detailed in this opinion piece, I think the right solution is to quarantine the Pages of Infowars and similar fake news, preventing their posts or shares of links to their web domain from getting any visibility in the News Feed. But deleting the Page without instances of it directly inciting violence would make Jones a martyr and strengthen his counterfactual movement. Deletion should be reserved for those that blatantly encourage acts of violence.

Rep. Ted Deutch (D-Florida) asked about how Infowars’ claims in YouTube videos that Parkland shooting’s survivors were crisis actors squared with the company’s policy. Google’s Global Head of Public Policy and Government Relations for YouTube Juniper Downs explained that “We have a specific policy that says that if you say a well-documented violent attack didn’t happen and you use the name or image of the survivors or victims of that attack, that is a malicious attack and it violates our policy.” She noted that YouTube has a “three strikes” policy, it is “demoting low-quality content and promoting more authoritative content,” and it’s now showing boxes atop result pages for problematic searches, like “is the earth flat?” with facts to dispel conspiracies.

Facebook’s answer was much less clear. Bickert told Deutch that “We do use a strikes model. What that means is that if a Page, or profile, or group is posting content and some of that violates our polices, we always remove the violating posts at a certain point” (emphasis mine). That’s where Facebook became suddenly less transparent.

“It depends on the nature of the content that is violating our policies. At a certain point we would also remove the Page, or the profile, or the group at issue,” Bickert continued. Deutch then asked how many strikes conspiracy theorists get. Bickert noted that “crisis actors” claims violate its policy and its removes that content. “And we would continue to remove any violations from the Infowars Page.” But regarding Page-level removals, she got wishy-washy, saying, “If they posted sufficient content that it would violate our threshold, then the page would come down. The threshold varies depending on the different types of violations.”

“The threshold varies”

Rep. Matt Gaetz (R-Florida) gave the conservatives’ side of the same argument, citing two posts by the Facebook Page “Milkshakes Against The Republican Party” that called for violence, including one that saying “Remember the shooting at the Republican baseball game? One of those should happen every week.”

While these posts have been removed, Gaetz asked why the Page hadn’t. Bickert noted that “There’s no place for any calls for violence on Facebook.” Regarding the threshold, she did reveal that “When someone posts an image of child sexual abuse imagery their account will come down right away. There are different thresholds for different violations.” But she repeatedly refused to make a judgement call about whether the Page should be removed until she could review it with her team.

Image: Bryce Durbin/TechCrunch

Showing surprising alignment in such a fractured political era, Democratic Representative Jamie Raskin of Florida said “I’m agreeing with the chairman about this and I think we arrived at the same exact same place when we were taking about at what threshold does Infowars have their Page taken down after they repeatedly denied the historical reality of massacres of children in public school.”

Facebook can’t rely on a shadowy “the threshold varies” explanation any more. It must outline exactly what types of violations incur not only post removal but strikes against their authors. Perhaps that’s something like “one strike for posts of child sexual abuse, three posts for inciting violence, five posts for bullying victims or denying documented tragedies occurred, and unlimited posts of less urgently dangerous false information.”

Whatever the specifics, Facebook needs to provide specifics. Until then, both liberals and conservatives will rightly claim that enforcement is haphazard and opaque.

For more from today’s hearing:

News Source = techcrunch.com

House Rep suggests converting Google, Facebook, Twitter into public utilities

in Apps/Delhi/Facebook/Google/Government/house of representatives/India/Policy/Politics/Social/TC/Twitter by

Amidst vague and uninformed questions during today’s House Judiciary hearing with Facebook, Google, and Twitter on social media filtering practices, Representative Steve King (R-Iowa) dropped a bombshell. “What about converting the large behemoth organizations that we’re talking about here into public utilities?”

King’s suggestion followed his inquiries about right-wing outlet Gateway Pundit losing reach on social media and how Facebook’s algorithm worked. The insinuation was that these companies cannot properly maintain fair platforms for discourse.

The Representative also suggested that there may be need for “review” of Section 230 of the Communications Decency Act that protects interactive computer services from being treated as the publisher of content users post on their platforms. If that rule was changed, social media companies could be held responsible for illegal content from copyright infringement or child pornography appearing on their platform. That would potentially cripple the social media industry, requiring extensive pre-vetting of any content they display.

The share prices of the tech giants did not see significant declines upon the Representative’s comments, indicating the markets don’t necessarily fear that overbearing regulation of this nature is likely.

Representative Steve King questions Google’s Juniper Downs

Here’s the exchange between King and Google’s Global Head of Public Policy and Government Relations for YouTube Juniper Downs:

King: “Ms Downs, I think you have a sense of my concern about where this is going. I’m all for freedom of speech, and free enterprise, and for competition and finding a way that competition itself does its own regulation so government doesn’t have to. But if this gets further out of hand, it appears to me that Section 230 needs to be reviewed.

And one of the discussions that I’m hearing is ‘what about converting the large behemoth organizations that we’re talking about here into public utilities?’ How do you respond to that inquiry?”

Downs: “As I said previously, we operate in a highly competitive environment , the tech  industry is incredibly dynamic, we see new entratnts all the time. We see competitorsacross  all of our products at google, and we believe that the framework that governs our services is an appropriate way to continue to support innovation.”

Unfortunately, many of the Representatives frittered away their five minutes each asking questions that companies had already answered in previous congressional hearings or public announcements, allowing them to burn the time without providing much new information.

One surprise was when Representative Jerrold Nadler (D-New York) motioned to cut the hearing for an executive session to discuss President Trump’s comments at the Helsinki press conference yesterday that he said were submissive to Russian president Vladimir Putin. However, the motion was defeated 12-10.

News Source = techcrunch.com

The 21st Century Internet Act aims to enshrine net neutrality in law

in Congress/Delhi/FCC/Government/India/net neutrality/Policy/Politics/TC by

Congress may soon vote on a new bill that would set net neutrality down as a matter of law rather than a set of rules to be changed every few years by the FCC. The “21st Century Internet Act,” introduced by Rep. Mike Coffman (R-CO), would ban blocking, throttling, paid prioritization, and eliminates all questions of jurisdiction.

The bill, announced online and at an event in Washington, DC today, would modify the Communications Act of 1934 (greatly built upon by the 1996 Telecommunications Act) and add a new “Title VIII” full of stipulations specific to internet providers.

This would settle the decades-long dispute over whether internet access is an “information service” or a “telecommunications service,” a legal distinction that either reins in (the former) or unleashes (the latter) the FCC on ISPs.

Instead of quibbling over whether the FCC has authority to write the rules or not, and then quibbling over the rules themselves, the act just codifies the rules as law and sets the FCC as the official watchdog.

The Commission shall have the authority to initiate investigations, bring enforcement actions, issue declaratory rulings, conduct rulemakings, and take other such actions… necessary to implement the requirements of this title.

It would no longer be a question of whether the FCC wants to have net neutrality rules or not — net neutrality would be the law and it would unequivocally be the Commission’s job to enforce it.

The basic blocking, throttling, and paid prioritization bans are very similar to the 2015 rule’s, and the law even institutes the “general conduct” rule that many complained was too vague. This catch-all rule says an ISP “may not unreasonably interfere with or disadvantage” users or edge providers from accessing or providing lawful content and services.

Because it isn’t specific, it means practices that may or may not be legal, such as zero rating, have to be evaluated case by case. That can be a lot of work — but it’s hard to think of a better way to provide against the shifting tactics of crafty ISPs.

Interestingly the act would require the FCC to investigate “unfair or deceptive acts or practices,” something that is frequently on the FTC’s plate — false advertising, misrepresenting the product, that kind of thing. Presumably this is to settle any jurisdictional dispute there, though the FTC may still come into play here and there.

Broadband providers would be eligible to receive money from the FCC’s Universal Service Fund, which it uses to help fulfill its mainline duty of making sure communications infrastructure is up to snuff. And while it could ask ISPs to contribute to the fund, the FCC is barred from rate regulation — telling providers what they can and can’t charge for their services. It was a worry that under the 2015 rules, the only thing stopping the Commission from doing so was voluntary forbearance (the technical term for opting out of statutory authority) from the capability to do so.

They also wouldn’t count as “common carriers,” a designation that comes with other responsibilities and oversight. This choice is practical if not, some may argue, completely correct: internet providers really do seem to qualify as common carriers as they are generally defined. But before the main reason for designating them as such was to justify the application of Title II, which granted the FCC authority to enforce the 2015 rules.

It’s all very confusing, right? This law, however, really cuts through a lot of the cruft of the past few decades and clearly establishes the “bright line” rules consumers know and understand.

Who will oppose it and why? Broadband providers will of course say first that the act is unnecessary because they’ve pledged to follow the rules voluntarily, and second that it will prevent them from innovating with services that technically break rules but are in fact beneficial to consumers. Don’t be fooled — these services don’t exist and never did. The only one that comes close is zero rating, and it’s a sham.

Remember, broadband providers also loudly called for “regulatory certainty” instead of the seesawing rules of the last five years. Be careful what you wish for!

Conservatives may oppose it because it expands regulations rather than reduces them, which is at least a valid position to take, as little as consumers may agree with it. The rules also have their origins in the Obama administration, which makes them burn partisan politicians at the touch.

It’s always hard to say whether a bill will be a success, and the processes are so slow anyway that it might be a year or more before we see this on the floor of the House. As for the President, it’s hard to say what he’ll do, as with so many other issues. That it would be difficult to cast the bill in partisan terms, practical as it is and introduced by a Republican Congressman, but that doesn’t mean it won’t be vetoed anyway.

Notably Rep. Coffman is lighting the candle under the FCC at both ends (if you’ll permit the confused metaphor) by supporting the House’s Congressional Review Act petition to undo the current administration’s rules: “While my bill moves through the Congress, I am taking an ‘all of the above’ approach by simultaneously signing the discharge petition on the CRA, and introducing my bill.”

At the very least the bill seems a good example of a law that takes the short path to providing consumers with net neutrality protections: direct and to the point, with no sweetheart clauses or funny business as far as I can tell. That said, it may yet be butchered in committee. We’ll follow its progress carefully.

News Source = techcrunch.com

Putin proposes a joint cybersecurity group with the US to investigate Russian election meddling

in Delhi/Government/India/Politics/Russia/Russian election interference/Security/TC/Trump administration by

Over the course of Monday’s controversial Helsinki summit, Russian President Vladimir Putin pushed an agenda that would ostensibly see the U.S. and Russia working side by side as allies. The two countries make stranger bedfellows than ever as just days prior, Trump’s own Department of Justice indicted 12 Russian intelligence officials for the infamous 2016 Democratic National Committee hack.

Nonetheless, the Russian president revived talks of a joint group between the U.S. and Russia dedicated to cybersecurity matters. For anyone with the security interests of the U.S. at heart, such a proposal, which Trump endorsed in a tweet one year ago, would truly be a worst-case scenario outcome of the puzzlingly cozy relationship between the two world leaders.

“Once again, President Trump mentioned the issue of the so-called interference of Russia [during] the American elections and I had to reiterate things I said several times…,” Putin said in Helsinki.

“Any specific material, if such things arise, we are ready to analyze together. For instance, we can analyze them through the joint working group on cyber security, the establishment of which we discussed during our previous contacts.”

Putin added that Russia favors “continued cooperation in counter-terrorism and maintaining cyber security.”

“The most recent example is their operational cooperation within the recently concluded World Football Cup,” Putin said. “In general, the contacts among the special services should be put to a system-wide basis should be brought to a systemic framework. I reminded President Trump about the suggestion to re-establish the working group on anti-terrorism.”

After a loud bipartisan rebuke followed Trump’s proposal of an “impenetrable [cybersecurity] unit” with Russia last year, the U.S. president walked his comments back a few steps, suggesting that they were hypothetical. Whether it ever materializes or not, the whole idea is a somewhat stunning departure from national security norms and one that would be broadly decried as letting the fox into the henhouse, given that evidence establishing Russia as a cyber adversary of the U.S., both currently and historically, is plentiful.

In 2017, the U.S. intelligence community issued such an assertion in no uncertain terms:

Russian efforts to influence the 2016 US presidential election represent the most recent expression of Moscow’s longstanding desire to undermine the US-led liberal democratic order, but these activities demonstrated a significant escalation in directness, level of activity, and scope of effort compared to previous operations.

The report notes that this information is sourced broadly, stating that “insights into Russian efforts—including specific cyber operations—and Russian views of key US players derive from multiple corroborating sources.”

CrowdStrike, the security firm involved in investigating the 2016 DNC hack, uncontroversially included Russia on a list of “notable nation-state adversaries” of the U.S. alongside China, North Korea and Iran.

Just days ago, U.S. Director of National Intelligence Dan Coats cautioned that “warning lights are blinking red again” when it comes to attacks on federal, state and local U.S. entities. Coats named Russia, China, Iran and North Korea as cyber aggressors against the U.S., adding that “Russia has been the most aggressive foreign actor, no question.”

It’s unclear what, if anything, the U.S. would stand to gain from such an arrangement, though it would stand to lose quite a bit, given the likelihood that Russia’s interest in influencing U.S. elections is ongoing. Putin’s comments in Helsinki indicate the spirit of such an effort lives on, misguided as it may be.

News Source = techcrunch.com

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