German Federal Cartel Office: vehicle infotainment system services licensing not compatible with new German antitrust provision
In a press release on 21 June 2023 (only in German), the German Federal Cartel Office (Bundeskartellamt) announced that it intended to prohibit Alphabet, Inc., i.e. its subsidiary Google Germany GmbH (hereinafter: “Google”) from continuing various practices in connection with licensing “Google Automotive Services” that it considers anti-competitive.
Google Automotive Services consist of Google Maps, a version of Google Play and Google Assistant. Its operating system is an Android base platform for vehicles. According to the Cartel Office, Google offers vehicle manufacturers these functions only as a package and with additional requirements, particularly regarding how the services are presented in a vehicle’s infotainment system.
The Cartel Office’s preliminary opinion is that Google’s conduct fits the description of various offences set out in the new (2021) section 19a of the German Act Against Restraints of Competition (Gesetz gegen Wettbwerbsbeschränkungen) (hereinafter “Section 19a”). The purpose of Section 19a is to provide the Cartel Office with a more effective control mechanism in the digital environment, enabling it to counteract at an early stage any dangers to competition posed by “digital giants” (companies having “paramount cross-market significance for competition”). As early as the end of 2021, the Cartel Office declared that Section 19a could apply to Google because Google has paramount significance for competition across markets (see its decision – only in German). The Cartel Office has also declared that Meta/Facebook, Amazon and Apple have paramount significance for competition across markets as defined in Section 19a. Amazon has lodged an appeal against this declaration with the German Federal Court of Justice (press release from 14 November 2022 – only in German). Declaratory proceedings have also been opened against Microsoft (press release from 28 March 2023 – only in German).
Companies that fall under Section 19a’s area of applicability can be prohibited by the Cartel Office from engaging in anti-competitive practices, except in the case that the company can provide objective justification for such practices.
In its press release, the Cartel Office criticises four of Google’s practices in connection with its Google Automotive Services:
1. Services are only offered to vehicle manufacturers as a package
The Cartel Office sees the combination of navigation, media content access, telephony and messenger services in connection with speech control of vehicle functions as essentially a complete infotainment system for vehicles. It believes that Google’s packaging of Google Automotive Services could be anti-competitive in that Google could leverage its dominant market position with one of the services in the package to expand into another market, specifically into a market for one of the other services where its position is not yet as strong.
2. Services are pre-installed as standard equipment and/or given a prominent position in the screen
In the Cartel Office’s opinion, Google’s practice of placing vehicle manufacturers under obligation to install its services as standard equipment and/or to present them more prominently than other companies’ applications on the screen means that alternative services could often be overlooked and thus more seldom used, which would constitute an obstacle to market access for other companies. Here, the Cartel Office apparently sees parallels to Google’s past practices with mobile devices.
3. Services’ interoperability can be restricted
The Cartel Office also assumes that Google is capable of hindering or preventing its services in the Google Automotive Services infotainment platform from being interoperable with other companies’ services, for example if Google Maps could be used only to a limited extent or not at all with another company’s virtual voice assistant.
4. Some vehicle manufacturers share in Google Assistant’s profits
The Cartel Office also sees a problem in the fact that Google has an agreement with some vehicle manufacturers to pass along to them a share of its advertising income from the use of Google Assistant as long as these vehicle manufacturers agree in return to install only Google Assistant as the virtual voice assistant in the Google Automotive Services infotainment platform.
Google now has the opportunity to present its position on the accusations. If the Cartel Office ultimately prohibits Google’s current practices in connection with Google Automotive Services, and Google requests court review, the question will probably arise as to the extent to which the Cartel Office must bow to the applicability priority of the Digital Markets Act, which entered into force in May. This act is intended to safeguard contestability and fairness in digital markets, promote innovation and ensure better protection for consumers. It is aimed at the digital giants that have been identified as “gatekeepers”. However, the responsibility for enforcing it lies with the EU Commission and not the German Cartel Office. So the Cartel Office’s close cooperation with the EU Commission in these proceedings is not surprising.
In summary, it can be said that antitrust authorities are closely watching further developments regarding vehicle infotainment systems.