Google – Toothless in Europe pt. V.

Better products, not ineffective regulation needed.

• The regulations being imposed upon Google by a seemingly hapless EU appear to be having the opposite effect to that intended in yet another sign that the bodies who make the rules for tech have no idea how the game is played.
• A small search engine based in France called Qwant is complaining that the fee structure that Google has put in place for handset OEMs disincentivises them from installing any alternatives meaning that nothing is changing.
• I have believed for some time that no handset maker in its right mind would take on Google’s fee structure as it would change what little profit they do have into big losses.
• When the EU sanctioned Google for its alleged abuses on Android (see here), it did not specify what it had to do but merely stated that it had to change and comply.
• The net result was that Google did as requested and unbundled the apps that earn it a return (Search and Chrome) and allowed handset makers to install its other ecosystem services without these two installed or set by default.
• However, to compensate for the loss of revenues that would ensue, Google has put in a charging structure for access to its proprietary software.
• This varies from country to country but looks like it will be around $10 – $20 per unit in most European markets (see here).
• Given that most handset makers make less than $10 in operating profit from their devices and would also lose the traffic acquisition cost payment from Google, this is a complete non-starter.
• Hence, my opinion that no-one will take Google up on this offer ensuring that things simply continue the way that they are (see here).
• If Qwant really wants to make an impact, it should focus on making its product better than Google’s rather than trying to get the ineffective EU to try and tilt the scale in its favor.
• Google has shown that creating a better product (Chrome) is the best way to wrest market share from a seemingly insurmountable and dominant position.
• Qwant reportedly had a deal with Huawei to install its search onto European devices as the default search provider, but without Google Search being present this was going to cost Huawei more than $100m.
• This has scuppered its deal with Huawei and sent it scurrying to the EU to complain.
• Consequently, I think that the best solution is for Qwant is to be installed alongside Google Search and for the two search engines to battle it out on their relative merits.
• If Qwant is really as good as its makers say it is, then at least in France, it should gain some traction.
• Furthermore, word of mouth and an amazing user experience would allow it to gradually gain traction in Europe and elsewhere over Google just as Chrome did over Internet Explorer.
• I think that the EU has long missed its opportunity (see here) to regulate Google because Google products are already the preferred choice of almost all its citizens.
• Hence, these citizens will simply download Google services and set then by default even if they are no longer present on the devices that they buy.
• If the EU wants things to change, it should focus on encouraging innovation to create better products for consumers, rather than cumbersome regulation that Google can easily sidestep.
• Nothing is going to change.