Following objections raised by German competition authorities this summer regarding the bundling of services like Google Maps in its Android-based car infotainment system, Google has proposed a significant shift. The company aims to unbundle certain services and remove restrictive contracts imposed on vehicle manufacturers to settle the regulator’s concerns.
The German competition regulator will conduct a market test of Google’s proposed changes before determining if these adjustments address the identified issues.
Earlier in June, the Federal Cartel Office (FCO) issued a statement outlining its concerns about Google Automotive Services (GAS). They specifically criticized Google’s practice of bundling multiple services—including Google Maps, Google Play, and Google Assistant—for automakers. The FCO also highlighted that car manufacturers were only eligible for a share of advertisement revenue if they did not pre-install competing voice assistants alongside Google’s. Furthermore, the office objected to Google requiring GAS licensees to set its services as defaults or display them prominently, while limiting interoperability with third-party services.
The FCO's preliminary assessment indicated that Google’s practices concerning GAS appear to violate Germany’s competition rules, which are particularly stringent for major digital firms. “We view Google’s bundling of its services as a way to reduce the competitive market for alternative services,” the FCO noted in their summer statement.
The FCO will now analyze Google’s proposals to determine if they adequately address the competition concerns by offering a sufficient level of service unbundling within its automotive infotainment platform. “Mandatory bundling of dominant services may lead to an expansion of market power and undermine competitors’ access,” emphasized FCO president Andreas Mundt in a press release about Google’s offer. “We will investigate whether these proposals effectively alleviate the highlighted issues.”
To resolve the FCO's concerns, Google has proposed offering three additional products separately: the Google Maps OEM Software Development Kit, the Google Play Store, and Cloud Custom Assistant, alongside the existing GAS product bundle. This approach is designed to allow manufacturers to develop navigation services comparable to Google Maps. The introduction of the Google Play Store would broaden the selection of third-party applications available to users, alleviating worries about forced reliance on Google’s offerings. The Cloud Custom Assistant is intended as an AI voice solution enabling manufacturers to support alternative voice assistants.
Additionally, Google is willing to eliminate contractual clauses that limit ad revenue sharing based on exclusive use of Google Assistant within the GAS framework. The FCO noted that Google is also prepared to remove requirements for making its services the defaults on the infotainment platform. Lastly, Google intends to enable interoperability, allowing license holders to integrate Google Assistant with other navigation services.
The FCO will base its final decision on the outcomes of the market tests, particularly focusing on whether Google’s proposals create a more competitive environment in the automotive sector. The regulator has been scrutinizing Google since January 2022 under Germany's special competition laws, leading to several concessions from the tech giant over its operational practices. This includes recent agreements on how Google handles user data, providing individuals more control over their information. Last year, Google also limited how it presented news from third-party publishers to fix concerns related to self-preferencing.
Germany's revamped digital competition rules notably apply only to significant tech entities in its local market, although companies like Meta have chosen to implement changes globally to simplify operations. Similarly, the European Union has launched its own digital competition reforms through the Digital Markets Act (DMA), aimed at regulating internet gatekeepers. The FCO’s actions against Big Tech hint at wider regulatory activities anticipated across the EU next year as compliance deadlines become effective for the six designated DMA gatekeepers and their core services, which include Google Maps and Google Play.
Interestingly, the EU has not classified GAS as a core platform service, likely prompting the FCO's increased scrutiny in this area, especially given Germany’s status as a major automotive manufacturer. In addition, the FCO opened an inquiry into Google Maps in June 2022, just before the timing of DMA’s approval.
The EU regulations began to apply in May 2023, with a compliance deadline set for March 2, 2024. This timeline suggests that the FCO might continue its investigation into Google Maps in the interim. The regulator has pledged to “closely cooperate” with EU competition authorities in overseeing the digital landscape.
As of June 2023, the FCO stated it would extend its investigation into the Google Maps Platform (GMP), indicating that Google must eliminate restrictions on the integration of its mapping services with third-party solutions. According to the FCO, limitations imposed by Google may hinder competition among applications related to mapping services used by logistics and delivery sectors. They expressed concern that such restrictions could also create barriers for alternative mapping solutions competing in automotive infotainment systems.
The proactive competition law reform efforts in Germany and throughout the EU are designed to combat abusive practices by dominant digital firms, aiming to mitigate their substantial market influence. European regulators are optimistic that these initiatives will more effectively address the economic disparities in the digital realm than traditional competition enforcement methods, exemplified by Italy’s $123 million fine against Google in May 2021 for restricting third-party applications in Android Auto.
Keywords: Google, Germany, Competition, Digital Economy, Automotive Services, Google Maps, Google Play, Data Reform
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