Following competition complaints lodged against Google in Germany this summer over the bundling of services such as Google Maps via its Android-based in-car infotainment system software, known as Google Automotive Services (GAS), the tech giant has offered some service unbundling and the removal of contractual restrictions it imposes on vehicle manufacturers in an attempt to settle the regulatory intervention.
The German competition agency will submit Google’s suggested solutions to automobile manufacturers in a market test before deciding whether or not they answer the difficulties it has found.
The country’s Federal Cartel Office (FCO) issued a statement of complaints to Google in June over how it conducts GAS, notably mentioning Google’s bundling of Google Maps, Google Play, and Google Assistant in the offer to car makers.
The statement also emphasized Google’s practice of only offering car manufacturers a cut of ad income provided they did not pre-install competing voice assistants alongside its own voice AI. The FCO also raised the issue of GAS license holders being required by Google to make its packaged services the default or otherwise prominently display them. It also took issue with Google restricting or refusing to enable interoperability of GAS services with third-party services.
The FCO said at the time that its early assessment of Google’s GAS practices was that they did not conform with Germany’s competition regulations for major digital enterprises, which allow the FCO more discretion to interfere when it feels competition is being affected.
“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 Foreign and Commonwealth Office (FCO) noted in the summer.
The regulator said that it would carefully review Google’s offer to see if it addresses the competition concerns by providing an acceptable amount of unbundling of its own services from its in-car entertainment platform.
“We are particularly concerned about the mandatory bundling of services with significant market strength and reach with services with limited market strength and reach.” This behavior, in particular, has the potential to increase market dominance and enhance ecosystems; it is a particularly risky form of ‘entering’ markets,” FCO president Andreas Mundt stated in a news statement announcing Google’s offer on Wednesday. “It may limit competitors’ ability to sell competing services.” We will now extensively analyze whether Google’s plans are capable of successfully ending the behaviors that have aroused concerns.”
To address the FCO’s competition concerns, Google has proposed three additional products: Google Maps OEM Software Development Kit, Google Play Store, and Cloud Custom Assistant, in addition to the GAS product bundle, which it claims will enable vehicle manufacturers to develop a maps and navigation service with functionalities comparable to those offered by Google Maps.
The advent of the Google Play Store would also enable end users to download a broader range of third-party applications, alleviating worries that they would be pushed to use Google’s own apps. The Cloud Custom Assistant is billed as “a proprietary AI voice assistant solution” for use in automobiles, which will allow car manufacturers to provide competing assistants.
The internet titan has also suggested removing contractual limitations on ad revenue sharing in exchange for its own Google Assistant voice AI being solely pre-installed on 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 Foreign and Commonwealth Office (FCO) said. “Lastly, Google is prepared to enable license holders to combine Google Assistant services with other maps and navigation services and provide for the technical preconditions to create the necessary interoperability.”
“The Bundeskartellamt [FCO] will decide whether Google’s proposals are generally capable of dispelling the concerns that have been addressed based on the results of the market tests.” In this context, the issue of whether Google’s plans would result in an unbundled offering of Google’s services in the automobile industry will be important,” it said.
Google was approached for feedback on its recommendations.
In January 2022, the IT giant’s company was identified as subject to Germany’s special competition abuse control framework. Since then, the FCO has forced a number of concessions from it about how it works, including this fall’s agreement on a reform of Google’s data rules that will give users greater control over how it uses their information. In an effort to address the regulator’s worries about self-preferencing, Google pledged last year to restrict how it presents news information licensed from third-party publishers in search results.
The German digital competition reboot only applies to designated tech giants in the market, though companies may choose to apply product changes globally to manage operational complexity (as Meta did this summer with the launch of a new account center that allows users to refuse its cross-site tracking, following an FCO intervention, and which the company said would be rolled out globally).
The European Union recently passed its own ex ante competition legislation, the Digital Markets Act (DMA), aimed at so-called Internet gatekeepers. So the FCO’s Big Tech enforcements provide a preview of the types of actions that may be coming down the pipeline across the EU next year, when the deadline for compliance for the six in-scope DMA gatekeepers and their 22 core platform services—a list that includes Google Maps, Google Play, Google Shopping, Google ads, Google Chrome, Google Android, Google search, and the Google-owned video sharing platform, YouTube—kicks in.
Notably, the EU has not identified GAS as a fundamental platform service, which may explain the FCO’s interest in it here as the bloc’s competition authorities try to minimize duplication in their interventions. (Germany’s status as a significant automaker is probably another factor in its control of Google’s automotive software and services.)
Additionally, the FCO started a process on Google Maps in June 2022, which was (temporarily) before the bloc’s co-legislators adopted the DMA.
Meanwhile, the pan-EU legislation went into effect in May 2023. However, the deadline for DMA gatekeepers to comply is March 2, 2024; thus, the full EU-wide Big Tech competition relaunch will not be available until next year. In the meantime, the FCO may have justification to continue its investigation into Google Maps. (On this front, the German regulator has also said that it would continue to “cooperate closely” with EU competition authorities on digital economy regulation.)
The FCO said in June 2023 that it will continue to investigate Google’s conditions of use for the Google Maps Platform (GMP), stating that its preliminary view is that the tech giant would need to remove limitations on integrating 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 Foreign and Commonwealth Office (FCO) said 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.”
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 that these more proactive interventions will do a better job of correcting imbalances in the digital economy than traditional competition enforcement has. (The $123 million fine that Italy’s competition authorities imposed on Google in May 2021 for placing restrictions on a third-party app developer using the Android Auto in-car operating system is another illustration of traditional enforcement.)
