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EU Set to Charge Google Over Android Phone Apps European Commission focusing on demand that phones load Google apps ENLARGE A smartphone running the Android mobile-operating system displays a Google app. EU competition chief Margrethe Vestager on Tuesday said the commission was focusing on Google’s demand that smartphone makers and mobile carriers using Android load Google apps on their devices. PHOTO: BLOOMBERG NEWS By NATALIA DROZDIAK and SAM SCHECHNER Updated April 19, 2016 1:06 p.m. ET 119 COMMENTS BRUSSELS—The European Union is set to issue formal antitrust charges against Alphabet Inc.’s Google for allegedly abusing the dominance of its Android mobile-operating system, three people familiar with the matter said, potentially threatening Google’s position in the fast-growing mobile-advertising market. The European Commission, the bloc’s antitrust watchdog, will issue a so-called statement of objections detailing the charges against Google on Wednesday, the people said. The charges are expected to center on Google’s insistence that smartphone makers and mobile carriers using Android load a folder of Google apps on their devices if they offer any of the company’s services— including search—on their phones. The manufacturers also load their own apps on the devices. The antitrust case represents one of the most serious challenges Google has yet faced from regulators, threatening an online-advertising machine that generated more than $67 billion in revenue last year. In 2016 research firm eMarketer predicts Google will earn roughly $34 billion in net mobile ad revenue, more than half its total net advertising income. As Internet users have migrated from desktops to mobile devices, Android has been central to Google’s strategy, creating an ecosystem that encourages handset makers and phone carriers to install Google apps, so that users continue to see the ads that Google sells. Android accounts for 59% of operating systems used on smartphones in the U.S., but in Western Europe that percentage rises to 71%, according to research firm IDC. The EU charges come as the growth of Google’s core advertising business continues to outstrip analysts’ expectations, particularly on mobile devices. Google has attributed its results in part to strong growth in its mobile search business. “This case has the potential to dramatically alter how they [Google] run their business,” said Brian Wieser, a senior analyst at Pivotal Research. “Investors don’t tend to pay nearly as much attention as they should.” Google declined to comment. EU competition chief Margrethe Vestager opened a formal investigation into Google’s conduct with its Android operating system last April, when she also filed separate formal charges against the company for allegedly skewing its search results to favor its own shopping service— accusations the company denies. For each of the formal charges issued against Android and the shopping service, the EU could impose fines as high as 10% of the company’s annual global revenue, which for Google would amount to fines of around $7 billion for each charge. Google could seek to negotiate a settlement in both cases. In its contracts, Google requires phone makers to pre-install a folder of 11 apps within one flick of the home screen. Speaking on Monday, Ms. Vestager said that she was concerned Google was shutting out rival app developers with these contracts because its strategy prevented consumers from letting them decide for themselves which apps to download. Google hit back, saying consumers have the last word about which apps they want. But some telecom firms and hardware makers reject that argument. “When users don’t even know there is a competitor, how do we compete?” asked one EU telecom executive, who has supported the case. Google’s relationship with Android is different from that of Apple Inc.’s with its iOS. Google doesn’t make all Android phones, so this opens it to complaints from third parties like handset makers and phone operators that sell their own white-label phones. The Android case is partly rooted in Google’s fraught relationship with European telecom companies, which have lobbied behind the scenes for regulators to file charges, telecom executives say. Carriers have wrestled with Google over topics ranging from heavy bandwidth use to the terms of revenue-sharing agreements for advertisements that the firms’ mobile subscribers see and click on. ENLARGE Telecom executives argue Google’s promotion of its own apps makes it difficult for them to promote their own apps for video or email, restricting them from selling their own advertisements and reducing their leverage in revenue-share negotiations with Google. Handset makers also complain that it is hard to differentiate themselves from their rivals because they don’t have as much freedom to pick and choose which apps are placed on the devices. Google executives respond that phone companies or manufacturers aren’t prohibited from including their own apps on an Android phone, and that competition is just “one click away.” And if the carriers or handset makers don’t want the apps, they don’t have to load them, Google executives say. Some companies have decided to forgo Google apps, but it has been a difficult road. Amazon.com Inc., for instance, used a customized version of Android in a smartphone it launched two years ago, which meant it also couldn’t include the more popular apps including Google Search, YouTube, Maps or the Play Store. But the device sold poorly, which some Google detractors blamed on the lack of Google apps. Write to Natalia Drozdiak at natalia.drozdiak@wsj.com and Sam Schechner atsam.schechner@wsj.com QUESTIONS: 1. What charges the European Union is expected to detail against Google on Wednesday? 2. What is the significance of the European Union's charge against Google? 3. How much Google is expected to earn in net mobile ad revenue this year? 4. Why has Android become central to Google's strategy? 5. Why do European telecom executives oppose Google's business practice? 6. How much fines the European Union could impose for each of the formal charges issued against Android and the shopping service?
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QUESTIONS:
1. what charges the European Union is expected to detail against Google on Wednesday?

The charge of abusing the dominance of its Android -operating system by insistence that
smartphone makers and mobile carriers using Android loa...


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