The Competition Commission of India (hereafter CCI) issued an order on October 20, 2022, fining Google INR 13,37,00,00,000 (USD) for violating Section 27 of the Competition Act, 2002 by abusing its dominant position in a number of markets within the Android mobile device ecosystem. In addition to the monetary fine, CCI had also issued a cease-and-desist order on Google for engaging in any actions that violated Section 4 of the aforementioned Act.
In the current information filed by the Informants, Mr. Umar Javeed, Ms. Sukarma Thapar, and Mr. Aaqib Javeed against Google LLC and Google India Private Limited under Section 19(1)(a) of the Competition Act, 2002, it is alleged that Google abused its dominant position in the mobile operating system related to markets by entering into restricting agreements in violation of Section 4 of the said Act.
Dominant Position: a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to-
- Operate independently of competitive forces prevailing in the relevant market; or
- Affect its competitors or consumers or the relevant market in its favor.
Section 4 of the Competition Act provides that an abuse of dominant position arises when an enterprise-
- Impose unfair or discriminatory condition in purchase of sale of goods or services or price in purchase or sale of goods or services;
- Limits or restricts the production of goods or services or technical or scientific development relating to goods or services to the prejudice of consumers;
- Indulges in practice resulting in denial of market access;
- Predatory pricing;
- Uses its dominant position in one relevant market to enter into, or protect, other relevant market.
By imposing unneeded/restrictive contractual clauses on OEMs regarding Play service APIs and Anti-fragmentation obligations, Google has violated the aforementioned conditions by dictating its terms to app developers and compelling them to mandatorily use its own "discriminatory practises," which has a negative impact on the market's underlying competition.
Contentions of the Informants
- By preventing the growth of competing mobile applications in the market, Google's requirement that its own applications be installed in order to get any part of smartphones manufactured, sold, exported, or promoted in India is a blatant breach of Section 4 read with Section 32 of the Act.;
- Google's integration with other programmes violates Section 4 read with Section 32 of the Act by forbidding the use of competing applications, endangering its monopoly in the home market.;
- In violation of Section 4 read with Section 32 of the Act, Google restricts access to competitive mobile devices based on alternative, potentially superior versions by deactivating the feature, so abusing its dominant position to reduce market competition.
- Anti-fragmentation Agreements (AFAs) prevented OEMs from providing their services to Android forks, making it impossible for them to create or market any devices that were not under Google's direct control. Due to the fact that the bulk of them were linked to Google, their forks were unable to be distributed as a result.
- In a similar vein, Income Sharing Agreements (RSAs) protected Google's search services from rivals, ensuring the protection of ad revenue and networking effects. These agreements never created the conditions for rival companies to effectively compete in Google's presence, depriving users of options.
Contentions of Google
- Apple's competition-related restrictions: Apple's iOS ecosystem and Google's Android ecosystem are in fierce conflict with one another and with each other's rivals. Since the core of Apple's business is the sale of high-end smart gadgets equipped with cutting-edge software, the company's network of connected devices is vertically integrated. While Google's business was discovered to be driven by the ultimate goal of expanding users on its platforms so that they engage with its revenue-earning service, i.e., online search, which directly influences the sale of online advertising services by Google.
- Android is an open-source mobile operating system that anybody may use to create smartphones and tablets. The majority of these Indian manufacturers use the Android operating system, which they frequently pair with Google Mobile Services (GMS), a set of applications, and Application Program Interfaces (APIs) to ensure seamless device functionality. In order to prevent any needless haphazard from end users, a mutual agreement with Google is consented to in order to gain the permission to install in favour of these applications on Android devices.
- The Mobile Application Distribution Agreement's (hereafter MADA) requirement for the pre-installation of apps and services in the default screen serves as a marketing incentive for payment on Android platforms.
- Additionally, the end users can choose whether or not to download competitive apps from the Play Store, for which the procedure has also been streamlined. The status quo bias of consumers who are hesitant to download alternative apps is an obstacle that rival programmes are difficult to overcome.
- By placing unreasonable conditions on the device manufacturers, pre-installation of a whole GMS suite under MADA violated Sections 4(2)(a)(i) and 4(2)(d) of the Act.
- The market for device manufacturers has been significantly impacted by the pre-installation of Google's proprietary apps upon signing of AFA/ACC for all manufacturers/distributors, consequently restricting their technical and scientific progress.
- According to the Director General, Google's Play Store policies are unfair, arbitrary, unclear, and ambiguous. However, Google's actions clearly violated Sections 4(2)(a)(i), Section 4(2)(b), and Section 4(2)(C) of the Act by imposing unfair discriminating practises and restricting the development of apps to the detriment of its consumers.
The Director General concluded that Google was in a dominating position relative to its competitors and was therefore in violation of Sections 4(2)(a)(i), 4(2)(b), 4(2)(c), Section 4(2)(d), and Section 4(2)(e) of the Act.
Competition Commission of India
The Competition Commission of India conducted a detailed analysis of the information and passed certain observations regarding the below mentioned allegations:
- Establishment of Portal
In addition to the monetary fine, CCI also ordered Google to create a portal offering alternatives for the default search engine in the initial phase to prevent further rumours.
- Third party billing services
Additionally, the CCI has instructed Google to present a clear policy for the data gathered on this platform, its use, and the potential risks associated with disclosing this information to other businesses and app developers.
- Revenue Sharing Agreements (RSA)
The CCI further found that the existence of Revenue Sharing Agreements (hence referred to as RSA) between OEMs and Google provided an advantage for the latter to protect proprietary information from rivals.
- Licensing of play store
To ensure market rectification and the interests of justice at the earliest opportunity, numerous other directives have been given addressing the anti-fragmentation obligations and licencing of Play Store to OEMs, including flexible default settings and simple app distribution through plat store.
The CCI has been given a time period of thirty days to provide the required financial details and supporting documents.
Since Android has offered a wealth of chances to facilitate and promote business transactions in India, the CCI ruling may represent a significant blow for its Indian consumers. Another negative that can accompany the current CCI order is the risk of security at such affordable costs.
Meta Title: Google's Dominant Position
The Indian Competition Commission ordered the largest internet company to stop using unfair commercial practises. The Competition Commission of India (CCI) stated in a statement that it has further ordered Google to change its behaviour within a certain time frame. According to the CCI, the requirement of pre-installing the entire Google Mobile Suite (GMS) under the Mobile Application Distribution Agreement (MADA), without the ability to remove it, and its prominent placement imposes an unfair condition on the device manufacturers and is therefore illegal under competition law.
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