China is reportedly preparing to launch an antitrust probe into Alphabet’s Google division, amid a bitter trade dispute between Beijing and the United States.
The pending investigation comes after a proposal submitted by Huawei Technologies, and would examine allegations Google leveraged the dominance of its Android mobile operating system to stifle competition, two people familiar with the matter told Reuters.
But questions remain about the clout and reach of the Chinese investigation, considering that all of Google’s services are blocked in China, and most Chinese smartphone vendors use an open-source version of Android.
According to the Reuters sources, the case was proposed by Huawei last year, and was submitted by the country’s top market regulator to the State Council’s antitrust committee for review.
A decision on whether to proceed with a formal investigation may come as soon as October and could be affected by the state of China’s relationship with the United States, one of the people reportedly said.
A tech cold war and trade dispute between China and a number of other countries, including the United States, has been ongoing for years now.
US President Donald Trump in particular has used national security concerns to target Huawei, TikTok, ZTE and other Chinese tech firms.
Amid this, China has reportedly been revamping its own antitrust laws with proposed amendments that includes a dramatic increase in maximum fines and expanded criteria for judging a company’s control of a market, Reuters reported.
A potential probe would also look at accusations that Google’s market position could cause “extreme damage” to Chinese companies like Huawei, as losing the US tech giant’s support for Android-based operating systems would lead to loss of confidence and revenue, a second person told Reuters.
Google did not provide immediate comment, while Huawei declined to comment.
Huawei and others are of course currently on a US trade blacklist (entity list) which prevents US companies such as Google, providing tech or technical support to new Huawei phone models and access to Google Mobile Services.
Google Mobile Services is the bundle of developer services, upon which most Android apps are based.
According to Reuters, Google had a temporary licence that exempted it from the ban on Huawei but it expired in August.
Earlier this month, Huawei announced the next iteration of its Harmony OS, as it seeks an alternative to Android – with 2021 hinted at as a general release date by its CEO.
And it is not immediately clear what China could hope to gain from an antitrust investigation of Google.
As mentioned above, Google’s search, email, and other services have been blocked in China since 2010.
And most Chinese smartphone vendors use an open-source version of the Android platform with alternatives to Google services on their domestic phones.
However it is reported that Chinese regulators will be looking at examples set by their counterparts in the EU and in India if it proceeds with the antitrust investigation.
“China will also look at what other countries have done, including holding inquiries with Google executives,” the source told Reuters.
A second source added that one learning point would be how fines are levied based on a firm’s global revenues rather than local revenues.