China's Android Concerns Could Help Apple And Other Competitors

A white paper issued last week by China’s Ministry of Industry and Information Technology could pose a significant threat to Android. According to the government paper, China's “mobile operating system research and development is too dependent on Android.” Reuters broke the story Tuesday. Should the Ministry take action to limit Android within the country, there could be a major impact on the world's most popular smartphone OS - and a potential big win for Apple and others.

As Reuters noted, the China Ministry was quite direct in its concern about Android:

While the Android system is open source, the core technology and technology roadmap is strictly controlled by Google.

What's behind  China's fears?

The world’s largest smartphone market could be worried that its homegrown companies will be unable to develop their own viable mobile OS. Or that Google’s control of Android might ultimately favor their Motorola division or other partners. While Android has become the dominant smartphone platform around the world, with an estimated 70% market share, Android commands an estimated 90% of the Chinese smartphone market.

Android's Bumpy Road To China

This is not the first time Google and China have locked horns over Android. Last May, China officially approved Google’s purchase of Motorola Mobility. As the Wall Street Journal noted at the time, the Chinese government required Google to keep the Android service open source and to make it broadly available to China’s handset manufacturers, including ZTE and Huawei. Despite this requirement, South Korea’s Samsung remains by far the dominant Android handset maker, both overall and inside China.

Late last year there was a highly publicized spat over Android between Google and China’s Alibaba Group, one of the world's largest e-commerce platforms. Alibaba had developed its own Aliyun mobile operating system and inked a deal with Acer to offer smarpthones using the new OS. At the time, more than 90% of Acer's smartphones ran on Google's Android. Under pressure from Google, however, Acer nixed the project right before launch.

Alibaba claimed that Aliyun was developed in-house using Linux, while Google claimed it was a "non-compatible" version  of Android. As a member of Google's Open Handset Alliance (OHA), Acer was prohibited from supporting non-compatible versions of Android. Andy Rubin, Google’s head of Android, posted comments on his public Google+ page that no doubt inflamed the situation:

The fact is, Aliyun uses the Android runtime, framework and tools. And your app store contains Android apps (including pirated Google apps). So there's really no disputing that Aliyun is based on the Android platform and takes advantage of all the hard work that's gone into that platform by the OHA.  

What Could Happen Next

This latest Ministry white paper could be a signal that the government will officially support Alibaba or other solutions over Google’s Android, or possibly seek ways to limit Android’s dominance of the Chinese market.

If so, this could have a significant impact on both the Android ecosystem and Google itself. Google’s hope is that Android will spur widespread adoption of Google services and generate significant mobile ad and mobile search revenues. Forbes, for example, estimates that mobile search ads contribute 35% to Google’s overall market value, “primarily because we expect mobile advertising revenues to increase.”

The latest actions by China could limit that potential. Google's services have a limited footprint in China even as China's low-cost smartphone manufacturers have helped quickly spread Android - and Google's mobile services - throughout the world. Should China take action to limit Android within the country, this could cause Chinese manufacturers to pull back on Android in China and around the world, perhaps opening doors for new operating systems.

Meanwhile, Apple continues its efforts to grow its sales in China. Earlier this year, Apple CEO Tim Cook predicted that China would become Apple’s number one market. "China is currently our second largest market, Cook said. "I believe it will become our first. I believe strongly that it will."

While in China, Cook met with a number of government officials and with China Mobile Chairman Xi Guohua. China Mobile is the world’s largest mobile phone carrier, with over 700 million subscribers. Anything that limits Android's appeal inside China will most likely help Apple. 

Along with Apple, of course, other smartphone OS companies may also benefit from China's growing concern over Android's market dominance. As TechCrunch has noted, for example, Jolla, the Finnish start-up whose OS is built atop the failed MeeGo operating system, is focusing its efforts on the massive China market. 

 

Top image courtesy of Android's Google+ page.