Tuesday, April 9, 2013

Google in trouble for predatory pricing -- for NOT charging.

Fairsearch Europe, a group including rivals Microsoft, claims Android operating system is 'deceptive way' to dominate markets. The group says Android is "a deceptive way to build advantages" which aims to "dominate the mobile marketplace and cement its control over consumer internet data for online advertising as usage shifts to mobile.

The complaint comes as the European commission's antitrust chief, JoaquĆ­n Almunia, continues an investigation into Google's dominance in search that has ground on for more than two years without any clear action. The EC competition group has raised four principal objections to Google's activities in Europe – normally a precursor to regulatory action.

Android-powered phones make up about 70% of those shipped in Europe at present, though a smaller amount of the installed base. Microsoft's Windows Phone makes up around 5%. Not to be left out, Apple has been the subject of European Union complaints about anticompetitive practices carried out by Apple, and its administrative department -- the European Commission -- is closely monitoring the situation.

Carriers throughout Europe (but mainly French carriers) have sent information regarding their contracts with Apple to the European Commission saying that Apple's rules for carrying the iPhone are anticompetitive.

According to many, predatory pricing is a practice of selling a product or service at a very low price, intending to reduce competitors out of the market, or create barriers to entry for potential new competitors. To many economists, this is an absurd concept: as long as any transaction takes place because the parties to it agree to the price, the only reason they will do so is because each party thinks he will be better off doing the transaction, than not. One party is not "preying on" the other.

To this author's mind, the term of arbitrary and moralizing based on non-economic views -- whoever is using the term disapproves of an actual price for whatever reason; there is no reason why Google should offer its mobile operating system for free, if handset makers agree. They do have a "EULA" or licensing agreement to abide by, after all.

Some argue that it is particularly hypocritical for a government agency to criticize companies' pricing, since the funding of government comes from taxation, which is not a voluntary transaction, but is based on coercion -- ultimately the threat of imprisonment. The only real predatory pricing is taxation, to many anarcho-capitalists.

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