Google's Russian Android Appeal Falls Flat

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A Russian appeals court recently rejected Google's appeal of a US$6.75 million fine regulators imposed on it for anticompetitive behavior -- that is, for forcing mobile device vendors to put Google Play apps on the main screens of devices using the Android operating system.

The Ninth Arbitration Appeal Court's ruling, handed down last month, means that the court considered the decision of Russia's Federal Antimonopoly Service to be reasonable and legitimate. Google therefore would have to pay the fine and take steps to remedy the situation.

"The Appeal Court upheld the judgment of the Court of First Instance, confirming legitimacy of FAS decision and determination," noted Elena Zaeva, the head of FAS' Department for Regulating Communications and Information Technologies. "Google must now execute the determination in full within the designated period."

FAS is confident that executing the determination will create "fair conditions for efficient competition" in the fast-growing mobile applications market, she added.

The decision stemmed from a complaint lodged by rival Yandex, which alleged that Google had abused its dominant market position in 2014. Three smartphone vendors -- Prestigio, Fly and Explay -- at the time said they no longer could preinstall Yandex apps and other services on their devices, according to Yandex spokesperson Vladimir Isaev.

Yandex's complaint, filed in February 2015, alleges that in order to install Google Play on their devices, manufacturers were required to preinstall the entire suite of Google GMS services, and set Google as the default GMS search on those devices.

Google prohibited the manufacturers from installing competitors' services on those devices, Yandex alleged.

Android was the leading mobile operating system in the world when the complaint was filed. It was installed on more than 84 percent of devices globally, and it was the leading mobile OS in Russia, installed on 86 percent of all smartphones in the country, according to Yandex officials.

FAS investigated the claims and found that Google and Google Ireland did indeed set restrictive conditions for using Google Play on mobile devices, ensured through rewards from Google. They included a requirement to preset Google search, to buy the entire Google Mobile Services application package, to give Google apps preferential placement on the device screen, and to prohibit installation of competing apps.

As a result of the FAS action, Google faced a fine of between 1 percent and 15 percent of its annual revenue from its Russian business in 2014; the company eventually was fined $6.75 million (438 million rubles).

The Russian court's decision came amid the European Commission's ongoing investigation of allegations that Google and Alphabet engaged in similar anticompetitive behavior involving Android in Europe.

The EC this spring accused Google of violating competition laws by forcing manufacturers to preinstall Google Search and the Chrome browser, and to set Google Search as the default on their devices.

Google prevented manufacturers from selling smartphones running on competing OS systems based on the Android open source code, and it gave financial incentives to manufacturers and mobile network operators on the condition they exclusively preinstall Google Search, the EC also alleged.

The outcome of the Russian case, though unsurprising, will have no bearing on the EC case, which will be determined on its own merits, according to Thomas Vinje, chairman of the global antitrust group at Clifford Chance, legal counsel to nonprofit FairSearch, the main complainant in the EC action.

"We are confident the European Commission will conclude that Google has breached EU antitrust law," Vinje told LinuxInsider, "but the commission is a highly sophisticated and independent antitrust authority and will reach its own decision independently of the Russians."

David Jones is a freelance writer based in Essex County, New Jersey. He has written for Reuters, Bloomberg, Crain's New York Business and The New York Times.

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