Google's control over China smartphone sector worries ministry

Google Inc has too much control over China's smartphone industry via its Android mobile operating system and has discriminated against some local firms, the technology ministry said in a white paper.

The white paper, authored by the research arm of China's Ministry of Industry and Information Technology, also said China had the ability to create its own mobile operating system.

"Our country's mobile operating system research and development is too dependent on Android," the paper, posted online on Friday but carried by local media on Tuesday, said.

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

The paper said Google had discriminated against some Chinese companies developing their operating systems by delaying the sharing of codes. Google had also used commercial agreements to restrain the business development of mobile devices of these companies, it added.

A Google spokesman in China declined to comment.

The ministry did not recommend any specific policies, regulatory actions or other measures.

Analysts said the white paper, which lauded Chinese companies such as Baidu Inc, Alibaba Group and Huawei Technologies for creating their own systems, could be a signal to the industry that regulations against Android are on the horizon.

"In China, regulators regulate regularly especially where they can position the regulations as helping out domestic companies," Duncan Clark, chairman of technology consultancy BDA, said in an email to Reuters.

"Ironically, Android's success has underpinned a lot of the growth in China smartphone vendors in recent years," Clark said. Home-grown companies had failed previously in China's market for simple handsets, he said, due to weakness in software and operating systems.

South Korea's Samsung Electronics Co Ltd, the world's largest smartphone maker, uses the Android system, as do Chinese manufacturers Huawei and ZTE Corp.

Last September, the launch of a smartphone between Acer Inc and a unit of Alibaba Group was cancelled due to what Alibaba said was pressure from Google on the Taiwanese group. Representatives for Acer and Google declined to comment on the matter at that time.

Technology research firm IDC has estimated that China surpassed the United States as the world's biggest smartphone market in 2012, accounting for 26.5 percent of all smartphones shipped.

In 2010, Google conducted a partial pullout from China on the basis of censorship and after it suffered a serious hacking episode that the company said emanated from China. Since then, Google's search market share in China has fallen from almost 30 percent to 15 percent at the end of 2012. Android has been Google's bright spot in China.

In the third quarter last year, Android accounted for 90 percent of all mobile operating systems in China while Apple Inc's iOS system was at just 4.2 percent.

© Thomson Reuters 2013