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Google’s mobile operating system Google Android was recently ‘designated’ under the DMA, and as of March must comply with the law. Most of Google Android is made up of the Android open-source code. But Google puts part of its OS called “Google Play Services” inside the Google Play Store which OEMs then must buy together. The store simply distributes apps. However, Google Play Services controls functionality of the handset; most apps will not work properly on a handset without this piece of the OS. The Commission therefore sensibly chose to include Google Play Services as part of the Google Android OS.

The lack of functionality of apps on handsets missing Google Play Services has been a significant barrier to entry of competing app stores and search engines. Consumers are far less interested in a device that does not give access to many apps and developers. An app store is a two-sided market with strong network effects; developers want to develop apps for the OS used by many consumers, while consumers want the OS that has the most apps.

With this designation, the Commission defines the code that constitutes the Google Android operating system by whether third-party apps can ‘effectively function’ on it. A definition of the CPS is based on functionality is robust to technological change as the OS evolves and robust to choices by Google to split off further pieces of the OS, name them something different, and put them in another place. By using a definition that captures the indirect network effects, they can be used by entrants who will make the market both for app stores and search more competitive.

The Why Axis is a weekly newsletter distributed by Bruegel, bringing you the latest research on European economic policy.