The Competition Commission slapped a steep penalty of Rs 1,337.76 crore on Google for abusing its dominant position in multiple markets in relation to Android mobile devices and ordered the internet major to cease and desist from various unfair business practices.
The regulator, which has passed the order after ordering a detailed probe more than three years ago, has also directed Google to modify its conduct within a defined timeline, according to a release.
Android is a popular open-source, mobile operating system installed by Original Equipment Manufacturers (OEMs) of smartphones and tablets.
CCI, which had started probing the case in April 2019, has directed that OEMs should not be restrained from choosing from amongst Google’s proprietary applications to be pre-installed and also not be forced to pre-install a bouquet of applications on their smart devices.
Google has been under the regulatory lens of CCI, which is currently also looking into few other cases related to the internet major. Matters pertaining to alleged anti-competitive practices by Google with respect to news content, smart TV and GPay are also before the regulator.
In February 2018, the regulator imposed a fine of Rs 136 crore on Google for unfair business practices in the Indian market for online search.
On 19th of October the watchdog had slapped penalties totalling Rs 392 crore on MakeMyTrip, Goibibo and OYO for unfair business practices.
For the current case, CCI considered five relevant markets in India. They are the markets for licensable OS for smart mobile devices, app store for Android smart mobile OS, general web search services, non-OS specific mobile web browsers and Online Video Hosting Platform (OVHP).
In April 2019, the regulator ordered a detailed probe in the matter following complaints by consumers of Android-based smartphones in the country.
The allegations of unfair business practices pertained to two agreements — Mobile Application Distribution Agreement (MADA) and Anti Fragmentation Agreement (AFA) — which were entered into by the OEMs of Android OS with Google.
CCI said that mandatory pre-installation of entire Google Mobile Suite (GMS) under MADA, with no option to un-install the same, and their prominent placement amounts to imposition of unfair condition on the device manufacturers and thereby contravenes competition law.
In a raft of directions, the watchdog said that OEMs should also not be forced in deciding the placement of pre-installed apps on their smart devices.
Licensing of Play Store, including Google Play Services, to OEMs should not be linked with the requirement of pre-installing Google search services, Chrome browser, YouTube, Google Maps, Gmail or any other application of Google, the release said.
“Google shall not offer any monetary/ other incentives to, or enter into any arrangement with, OEMs for ensuring exclusivity for its search services,” it added.
Among others, CCI said Google should not restrict un-installing of its pre-installed apps by the users.
“Google shall allow the users, during the initial device setup, to choose their default search engine for all search entry points. Users should have the flexibility to easily set as well as easily change the default settings in their devices, in minimum steps possible,” the release said.
Startups cheer CCI order penalising Google for abuse of dominant market position
Indian startups called the Competition Commission of India’s order penalising Google for allegedly abusing its dominant market position in the Android ecosystem as a validation of their concerns. Experts, however, also raised the risk of hefty penalties hurting the incentive for the Internet major to innovate and distribute free products that have sparked whole new digital ecosystems.
“This landmark judgement from the CCI is the perfect Diwali gift for the Indian startup ecosystem, its founders, investors and all other stakeholders,” Khanor, founder of startup TrulyMadly, told ET. “This verdict is for the Android operating system and bundling of Google’s various proprietary apps like Play Store, search, Chrome, YouTube, etc., and concludes that Google has leveraged its dominant position in the online search market and app store market for Android OS to enter and protect its own access while denying access to other players.”
Google’s Android operating system powers 97% of the country’s 600 million smartphones, according to research firm Counterpoint.
The startup community is also “eagerly awaiting” CCI’s order on the Google payments issue (30% commission) and hopes that the antitrust watchdog will provide relief from the hefty commission it is imposing on digital startups, Khanor said.
Murugavel Janakiraman, founder-CEO of Bharat Matrimony, also has similar views. “The CCI verdict vindicates our stance on Google’s dominance and we hope for a similar verdict on the Play billing wherein the CCI will look into Google’s app marketplace dominance too,” he said.
Minister of state for electronics and information technology Rajeev Chandrasekhar told ET that he welcomed CCI’s decision as openness and a free and fair Internet was a firm policy goal of the government. “An open Internet is what India expects, that is, an Internet where free choice, expectations of consumers, is not distorted by the market power of any company — big or small and foreign or Indian,” he said.
Google finds itself embroiled in various antitrust investigations across the globe. It lost an appeal against a record $4.3 billion fine in the European Union for allegedly using the dominance of Android to thwart competition. It is also subject to Germany’s new regulation for large companies.
Reactions on the penalty imposed by CCI on Google
Akshayy Nanda, partner at law firm Saraf & Partners, however flagged concerns about the imposing of such a hefty penalty. He said this might impact Google’s incentives to innovate in the market.
Salman Waris, partner and head of technology, media, and telecommunications at TechLegis, said he expected that Google would challenge this order “more because of the restrictions that are being placed on its business model than for the penalty imposed”.
Rahul Sharma, founder of cyber policy and data privacy risk advisory firm The Perspective, said tech businesses abusing their dominant position were being challenged across continents, and called the CCI verdict a positive one.
Research firm Techarc’s chief analyst, Faisal Kawoosa, said any tech company would want to leverage the trust along with data and create as many use cases as possible for users and called it “inevitable” with changing tech landscape.
Source: The Economic Times, NewsDrum