Is Google’s growing dominance of the mobile market hindering innovation? David Wood, ICOMP Legal Counsel, takes a closer look at how the industry can remain competitive…
The mobile Internet is transforming search, search advertising, and online advertising. The market opportunity is significant; according to the IAB, global mobile advertising revenues are projected to reach $20 billion by 2015, with search and maps presenting the greatest potential.
The recent ComScore overview of the mobile landscape across five leading European markets, showed cross-platform growth of digital media consumption on the rise in the region, buoyed by the growth in adoption of mobile devices.
ICOMP is keen to see this potential realised, and campaigns in support of principles that are essential to make this market more healthy and competitive.
However, Google’s dominance of the mobile marketplace is foreclosing opportunities for innovators. Google has engaged in a variety of anticompetitive strategies to protect its existing monopolies in search and online advertising and to extend those monopolies to the mobile screen: from placing anticompetitive restrictions on the granting of handset manufacturers’ access to Android, abusing its market power to monopolise mobile search to denying access to interoperability information and creating restrictive exclusive search agreements with mobile service providers.
The common goal of these practices is to strengthen Google’s monopoly power and stifle competition, as exemplified by their acquisitions in this sector, from AdMob, and then AdMeld and now Motorola Mobility.
Google has always moved quickly to eliminate potential threats to its search dominance, and their activity in the mobile marketplace is proving to illustrate this statement perfectly. For instance, when Google announced its intent to acquire AdMob in November 2009, it faced a potential threat from ads that were being served to users directly within mobile apps. At the time of the deal, Google’s share of such in-app advertising was only around 20 percent.
Stakeholders across the mobile ecosystem raised concerns about the acquisition. They worried that it would reduce competition in the supply of mobile advertising platforms and enable Google to increase its already significant market power in mobile advertising. They also noted that the deal would eliminate one of the most promising competitors to Google’s mobile search monopoly.
Although the Federal Trade Commission ultimately decided not to challenge the deal, history shows that these concerns were well founded. Current market data indicate that Google today controls over 95 percent of searches conducted globally on mobile devices and a similar share of mobile search ad revenues
And looking to the future, many voices express the concern that Google’s acquisition of Motorola’s huge patent portfolio will give it additional leverage to oblige device makers to use an expanding range of Google technologies and services. This leaves mobile service providers at the mercy of Google, which will have the ability—and often the incentive—to block them from the growing market of Android phones, unless of course those service providers align with Google’s interests by locking in Google services like search, advertising, and geo-location. It is therefore unsurprising that those who might ‘hate’ Google – as a recent columnist noted – are not speaking openly; it is dangerous to bite the hand that feeds, especially if it is the only hand out there.
The explosive growth of mobile search and mobile advertising represents a major opportunity, as the mobile ecosystem creates a fertile ground for innovation in new applications and services as well as a huge, still largely untapped, source of revenues. Creating a competitive environment which curtails monopolies in mobile search and advertising and allows today’s innovators to carve a space out in tomorrow’s mobile ecosystem is vital for the health of this important segment of the economy.
About the author
ICOMP Legal Counsel, David Wood
David Wood is ICOMP’s Legal Counsel and an expert on issues facing the online marketplace; including competition, privacy, security and IPR.
Mr. Wood is an English qualified partner and a member of the Brussels Bar based in the Brussels office of Gibson, Dunn & Crutcher, where he serves as Partner-in-Charge of the office.
Mr. Wood’s practice encompasses the full range of antitrust issues, including cartels, merger control (often involving the co-ordination of cases before several different competition authorities), abuse of dominance, restrictive agreements, sector inquiries and private enforcement. He has particular experience with cases involving abusive pricing and refusals to supply by dominant undertakings, as well as the establishment of joint dominance and network-related issues. He has strong sectoral expertise in the financial services and media / high-tech sectors.
Mr. Wood began his legal career in 1986 working in the London and Brussels offices of a major international law firm, where he practiced litigation and commercial law, particularly where antitrust issues were involved.
From 1992, he spent 10 years at the antitrust enforcement division of the European Commission (DG Competition) including positions as Head of the Financial Services Unit and Acting Head of the Media Unit. During his time at the Commission he was responsible for the teams involved in some of the most hard-fought cartel cases and some of the most high-profile and complex media, transport and financial services cases.
He was also a member of the Commission working groups responsible for most of the significant developments in EU antitrust policy and appeared regularly before the European Courts of Justice.
In 2002, Mr. Wood returned to private practice in Brussels. As one of the few lawyers in private practice to have held a senior position in DG Competition, he brings to his clients not only deep experience of European antitrust enforcement, but also valuable insights into how to manage risk and avoid problems.
Since leaving the Commission, he has advised and represented a wide range of companies principally in the financial services and media sectors but also in the pharmaceutical, chemical, software, consumer electronics and transport sectors.
He is a frequent writer and speaker on competition law issues and is a member of the editorial board of Competition Law Insight.
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