Google is aiming to resolve a German antitrust investigation into anticompetitive practices concerning its Google Automotive Services platform through a series of proposed remedies that aim to appease the regulators’ concerns.
Germany’s Federal Cartel Office (FCO) objected to how Google bundles and contracts services like Google Maps and Google Play to car manufacturers in an investigation launched earlier this year.
In response, Google is offering to make various concessions including unbundling some services, enabling interoperability, and removing certain restrictive terms. German authorities will conduct a market test that will involve stakeholders before deciding if the remedies adequately address the issues.
Bundling and Contract Terms Under Fire
Germany’s Federal Cartel Office (FCO) initiated proceedings in June 2023 based on preliminary findings that some Google Automotive Services (GAS) licensing practices may be violating domestic competition law.
Specifically targeted were Google’s bundling of Google Maps, the Google Play app store, and Google Assistant into a single offering for vehicle infotainment systems. Manufacturers claimed that this bundle hampers their ability to integrate individual services from rivals.
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Additionally, the FCO flagged Google’s ad revenue sharing agreements, which were tied to granting exclusive access to Google Assistant in cars. They also criticized mandates to set Google services as default and limiting third-party interoperability.
Authorities were worried that such practices leveraged Google’s existing market power to force out emerging automotive technologies offered by both local and international vendors. This could gradually result in reduced consumer choice and opportunities for competitors.
Google Offers Tailored Remedies to Restore Competition
Hoping to dispel regulators’ worries and avoid penalties, Google formulated wide-ranging remedies centered on unbundling current service packages.
First, it proposed to separately offer Google Maps’ software development kit, Google Play Store, and a Cloud Custom Assistant platform. It argues that this will enable car manufacturers to build competitive alternative solutions rivaling Google’s integrated offerings in maps, apps, and voice AI.
Additionally, Google volunteered to scrap contractual terms that condition advertising revenue sharing by exclusively pre-installing Google Assistant. Similar requirements to set Google services as default or primary options will also be eliminated if authorities give these remedies a definite green light.
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Finally, the company put forward provisions to enable interoperability between Google Assistant and non-Google apps like maps and navigation platforms. Collectively, the concessions aim to increase the range of choices for manufacturers and enhance platforms’ openness to third parties.
German authorities described the main criteria as whether proposals genuinely unbundle Google Automotive Services across the board. If deemed adequate during a manufacturer testing phase, regulators will likely cease further action against Google.
“We are now going to examine very closely whether Google’s proposals are capable of effectively terminating the practices that have raised concerns.”, the head of the FCO, Andreas Mundt, commented in a press release issued this week.
Broader EU Competition Considerations Emerge
The FCO’s proceeding coincides with the ongoing preparations for embracing Europe’s Digital Markets Act (DMA) – a law that is expected to be rolled out and enforced starting in early 2024. Though not designating automotive services as a core platform, the legislation promises proactive oversight of abusive behaviors by designated gatekeepers.
As Alphabet (GOOG), the parent company of Google, falls under the scope of the pending ex ante rules, concessions extracted by German authorities could influence EU-wide practices in this specific segment where both the tech and automotive industry cross. Already, the company has updated several data policies and search result display protocols locally to align with the bloc’s latest pressures concerning its antitrust rules.
By preventing and solving ongoing investigations now, Google may avoid harsher scrutiny or sanctions under the imminent DMA regime.
The FCO’s Measures Could Have an Impact Beyond Germany
As home to Mercedes, Volkswagen, and BMW, Germany’s view of automotive technology carries significant weight. Google’s overtures could reverberate across other jurisdictions that are likewise monitoring the power the tech company has over car manufacturers.
With sweeping European digital regulations about to be adopted, the company has incentives to smooth regional conflicts sooner rather than later. Consumers may expect continuous dialogues between regulators and gatekeepers over competitive imbalances across vital economic sectors that aim to comply with the imminent enforcement of the upcoming DMA.