The Competition Commission (hereinafter referred to as the "Commission") in its order dated October 20, 2022 imposed a penalty of INR 13.377 billion ($161.9 million) on Google for abusing its dominant position in multiple markets in the Android mobile device ecosystem, apart from issuing cease and desist order.1 The Commission further directed Google to modify its conduct within a defined timeline.
In 2019, the Commission ordered a detailed probe following complaints by users of android- based smartphones in the country. Google's Android is an open-source, mobile operating system installed by the Original Equipment Manufacturers (OEMs) of the smartphones. Google operates/ manages the Android Operating System (OS) as well as licences its other proprietary applications which is then used by OEMs in their smart phones. Accordingly, they enter into multiple agreements to govern their rights and obligations viz. Mobile Application Distribution System (MADA), Anti-fragmentation Agreement (AFA), Android Compatibility Commitment Agreement, etc. These agreements impose restrictions on companies providing same services thereby, excluding them from participating in the competition and in turn resulted in foreclosing the market for them as well as eliminating choice for users.
The Commission in its inquiry examined practices of Google with respect to licensing of Android Mobile Operating system and various proprietary mobile applications namely, Play store, Google Search, Google Chrome, You Tube etc. for the said purpose, the Commission delineated the Markets for licensable OS smart mobile devices in India, app store for android smart mobile OS, general web search services, non-OS specific mobile web browsers, online video hosting platform (OVHP) in India.
Google was found to be driven by the ultimate intent of increasing users on its Platforms so they interact with its revenue earning service, that is, online search which directly affects sale of online advertising services by Google.
Thus, it was further observed by the Commission that the objective of Google by way of entering into these agreement was to protect and strengthen its dominant position in general search services and, thus, it revenue from search advertisements.
It was held by Commission that:
- Mandatory pre-installation of entire Google Mobile Suite (GMS) under MADA, with no option to un-install the same) amounted to imposition of unfair condition on the device manufacturers and thereby is in contravention of provisions of Section 4(2)(a)(i) and 4 (2)(d) of the Competition Commission Act, 2002 (the Act).2
- Google created a perpetually dominant position in the online search market which resulted in denial of market access to competing search apps, in contravention of 4(2)(c)3 of the Act and further leveraged its dominant position in the online search market for android OS, non-OS specific web browser through Google Chrome App, OVHP market through YouTube which is in contravention to Section 4(2)(e)4 of the Act.
- The pre-installation of proprietary apps conditional upon signing of AFA/ACC for all android devices manufactured/distributed/marketed by device manufacturers resulted in reducing the ability and incentive of device manufacturer to develop and sell devices operating on alternative versions of Android was also held to be in violation of the provisions of Section 4(2)(b)(ii) of the Act.5
In accordance with the Section 27 of the Act,6 the Commission imposed monetary penalty and issued a cease and desist order against Google for indulging in anticompetitive practices in violation of section 4 of the Act, further recommending the following measures:
- OEMs shall neither be restrained from choosing from amongst Googles' proprietary applications to be pre-installed nor should be forced to pre-install a bouquet of applications and deciding the placement of these application on their smart devices;
- Licensing of Play Store to OEMs shall not be linked with the requirement of preinstallation of Google Apps;
- Google shall not offer any monetary or other incentives to enter into any arrangement with OEMs or deny access to its Play services to disadvantage OEMs, app developers and other potential competitors;
- Google shall allow the developers of app stores to distribute their app stores through Play Store.
Not satisfied from the said order of the Commission, Google challenged the order before the National Company Law Appellate Tribunal on grounds that it affects consumer safety and experience on Android and could further raise the smartphone prices, thereby seeking for immediate stay on the said order. Another allegation pressed by Google against the Commission was that the said order has copy-pasted parts of a ruling passed by the European Union Commission against Google in 2018, thereby also representing the order to be 'patently erroneous' and 'fraught with errors'.
The Tech giant suffered a major setback with the NCLAT's refusal to impose an interim stay on the order of the Commission and instead asked it to deposit ten (10) percent of the penalty amount. The said order refusing the imposition of interim stay was pronounced by the Appellate Authority on January 04, 2023.
Rachita Thakur, Junior Associate at S.S. Rana & Co. has assisted in the research of this article.
1. PRESS RELEASE No. 56/2022-23, Competition Commission of India
2. Section 4(2)(a)(i)- There shall be an abuse of dominant position 4, if an enterprise or a group- (a) directly or indirectly, imposes unfair or discriminatory— (i) condition in purchase or sale of goods or service
3. Section 4(2)(c)- There shall be an abuse of dominant position 4, if an enterprise or a group-(c) indulges in practice or practices resulting in denial of market access 5 [in any manner]
4. Section 4(2)(c)- There shall be an abuse of dominant position 4-(e) uses its dominant position in one relevant market to enter into, or protect, other relevant markets
5. Section 4(2)(c)- There shall be an abuse of dominant position 4- (b) limits or restricts— (i) production of goods or provision of services or market therefor; or (ii) technical or scientific development relating to goods or services to the prejudice of consumers;
6. Section 27- Orders by Commission after inquiry into agreements or abuse of dominant position- gives right to the Commission, after an inquiry into agreements or abuse of dominant position, to pass an appropriate order.
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