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Google makes bid to resolve competition concerns in Germany over its automotive services bundling
December 26, 2023

Google makes bid to resolve competition concerns in Germany over its automotive services bundling

Reading Time: 5 minutes

Following competition objections raised on Google in Germany this summer over bundling of services including Google Maps via its Android-based in-car infotainment system software, known as Google Automotive Services (GAS), the tech giant has made an offer of some service unbundling and the removal of contractual restrictions it applies to vehicle makers in a bid to settle the regulatory intervention.

Google’s proposed remedies will be put to car makers in a market test by the German competition regulator before it decides whether or not they resolve issues it’s identified.

Back in June, the country’s Federal Cartel Office (FCO) sent a statement of objections to the tech giant over how it operates GAS — specifically calling out Google’s bundling of Google Maps, Google Play and Google Assistant in the offer to vehicle manufacturers.

The statement also highlighted Google’s practice of only granting vehicle makers a share of ad revenue if they refrained from pre-installing other voice assistants next to its own voice AI. Another concern the FCO raised is GAS licence holders are required by Google to set its bundled services as the default or else display them prominently. It also objected to Google limiting or refusing to allow interoperability of services included in GAS with third-party services.

At the time, the FCO said its preliminary view of Google’s practices around GAS were that they do not comply with Germany’s competition rules for large digital companies — which give the FCO greater leeway to intervene when it suspects competition is being harmed.

‘In particular, we take a critical view of Google offering its services for infotainment systems as a bundle only, as this reduces its competitors’ chances to sell their competing services as individual services,’ the FCO said in the summer.

The regulator said it will now carefully examine Google’s offer to decide if it fixes the competition concerns by offering an adequate level of unbundling of its own services from its in-car infotainment platform.

‘We are particularly concerned about the compulsory bundling of services with great market strength and reach with services that are less strong. This conduct in particular can result in expanding market power and strengthening ecosystems; it is a particularly problematic way of ‘penetrating’ markets,’ FCO president Andreas Mundt said in a press release to announce Google’s offer Wednesday. ‘It could reduce competitors’ opportunities to sell competing services. We are now going to examine very closely whether Google’s proposals are capable of effectively terminating the practices that have raised concerns.’

The remedies Google has proposed to address the FCO’s competition concerns are to separately offer three further products: Google Maps OEM Software Development Kit, Google Play Store and Cloud Custom Assistant, in addition to the GAS product bundle — which it says will enable vehicle makers to develop a maps and navigation service with functionalities equivalent to those offered by Google Maps.

The addition of the Google Play Store would also allow end users to download a wider choice of third party apps, to reduce concerns about them being nudged towards using Google’s own apps. The Cloud Custom Assistant is described as ‘a proprietary AI voice assistant solution’ for use in vehicles to enable car makers to offer competing assistants.

The tech giant has also proposed to remove contractual provisions it imposes on sharing ad revenue on the condition its own Google Assistant voice AI is exclusively pre-installed in the GAS infotainment platform.

‘Google is also prepared to eliminate its contractual provisions on setting Google services as default applications or displaying them prominently in the infotainment platform,’ the FCO also noted. ‘Lastly, Google is prepared to enable licence holders to combine Google Assistant services with other maps and navigation services and provide for the technical preconditions to create the necessary interoperability.’

‘Based on the results of the market tests the Bundeskartellamt [FCO] will decide whether Google’s proposals are generally capable of dispelling the concerns that have been addressed. The question of whether Google’s proposals will result in an unbundled offering of Google’s services in the automotive sector will be decisive in this context,’ it added.

Google was contacted for comment on its proposals.

The tech giant’s business was designated as subject to Germany’s special competition abuse control regime back in January 2022. Since then the FCO has extracted a number of concessions from it over how it operates — including, this fall, securing agreement on a reform of Google’s data terms under which it will provide users with more choice over how it can use their information. Last year, Google also offered to limit how it displays news content its licensed from third party publishers in search results in a bid to resolve the regulator’s concerns around self-preferencing.

The German digital competition reboot only applies to designated tech giants locally, in the market — although companies may opt to apply product changes globally to manage operational complexity (as, for example, Meta did this summer with the launch of a new account center that lets users refuse its cross-site tracking, after an FCO intervention, which the company said would be rolled out globally).

The European Union also recently implemented its own ex ante competition reformed, in the form of the Digital Markets Act (DMA), which is aimed at so-called Internet gatekeepers. So the FCO’s enforcements on Big Tech offer a glimpse of the types of actions that may be coming down the pipe across the bloc next year when the deadline for compliance kicks in for the six in-scope DMA gatekeepers and their 22 core platform services — a list which includes Google Maps, Google Play, Google Shopping, Google ads, Google Chrome, Google Android, Google search and the Google-owned video sharing platform, YouTube.

Notably the EU has not designated GAS a core platform service — which may, in part, explain the FCO’s attention on it here, as competition regulators in the bloc work to avoid duplication in their interventions. (Germany being a major car maker is also likely driving its oversight of Google’s automotive software and services.)

And while the FCO also opened a proceeding on Google Maps in June 2022 that was (shortly) before the DMA was approved by the bloc’s co-legislators.

The pan-EU regulation, meanwhile, started to apply, in May 2023. But the deadline for DMA gatekeepers to come into compliance is March 2, 2024 — so the full EU-wide Big Tech competition reboot won’t be up and running until next year. Which may give the FCO reason enough to continue its scrutiny of Google Maps in the meanwhile. (On this front the German regulator has also said it will continue to ‘cooperate closely’ with EU competition authorities on regulating the digital economy.)

As of June 2023, the FCO said it would keep investigating Google’s terms of use for the Google Maps Platform (GMP), saying then that its preliminary assessment is the tech giant would need to put an end to restrictions on combining its own GMP map services with third-party map services.

‘These restrictions may impede competition between applications relating to map services as used by logistics, transport and delivery service providers, for instance,’ the FCO posited at the time. ‘They may also have a negative effect on competition between services for infotainment systems in vehicles because they make it more difficult for map service providers to develop effective alternatives to Google Maps.’

The ex ante competition law reforms in Germany and across the EU aim to curb abusive behaviors by digital giants that may further entrench their massive market power — with European regulators hoping these more proactive interventions can do a better job of correcting imbalances in the digital economy than classical competition enforcement has been able to achieve. (A related example of classical enforcement is the $123M fine levied on Google by Italy’s competition watchdog, back in May 2021, over restrictions it had applied to a third party app maker via the Android Auto in-car software.)

Reference: https://techcrunch.com/2023/12/22/google-automotive-services-offer-to-fco/

Ref: techcrunch

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