Read Time: 10 minutes

Synopsis

The Competition Commission of India (CCI) on Thursday imposed a fine of Rs. 1337.76 crores on Google for abusing its dominant position in the Android Mobile Ecosystem Market, a CCI press release stated. The commission also issued a cease and desist order against and has asked Google to “modify its conduct” within the prescribed timeline.

The commission, in the inquiry, examined the practices undertaken by Google with respect to licensing of the Android mobile operating system and its various applications like Play Store, Google Search, Google Chrome, YouTube, etc.

The CCI delineated the market into the following:

a. Market for licensable OS for smart mobile devices in India

b. Market for app store for Android smart mobile OS in India

c. Market for general web search services in India

d. Market for non-OS specific mobile web browsers in India

e. Market for online video hosting platform (OVHP) in India.

The commission rejected the arguments of Google that competitive constraints were faced by Google from Apple and stated that

“Apple’s business is primarily based on a vertically integrated smart device ecosystem which focuses on sale of high-end smart devices with state of the art software components. Whereas Google’s business was found to be driven by the ultimate intent of increasing users on its platforms so that they interact with its revenue earning service i.e., online search which directly affects sale of online advertising services by Google.”

The commission noted that there is no substitutability between Google’s Play Store and Apple’s App Store and the competition between Google and Apple is limited at the time of deciding which device to buy.

With respect to the Mobile Application Distribution Agreement, the commission noted that it was the most prominent search entry point i.e., the search app, widget, and chrome browser are pre-installed on Android devices, which accorded significant competitive edge to Google’s search services over its competitors. Other than that, Google also had a competitive edge over its competitors with regard to revenue-earning apps i.e. YouTube on Android devices.

The commission noted that “The competitors of these services could never avail the same level of market access which Google secured and embedded for itself through MADA. Network effects, coupled with status quo bias, create significant entry barriers for competitors of Google to enter or operate in the concerned markets.”

The commission in its order noted that there was foreclosing of the market for the competitors as well as eliminating choice for users because of the Revenue Sharing Agreements (RSA). The RSA gave Google exclusivity for its search services to the total exclusion of competitors.

Following are the points that were concluded by the commission.

1. Mandatory pre-installation of the entire Google Mobile Suite (GMS) under MADA (with no option to un-install the same) and their prominent placement amounts to imposition of an unfair conditions on the device manufacturers and thereby in contravention of the provisions of Section 4(2)(a)(i) of the Act

2. Google has perpetuated its dominant position in the online search market resulting in the denial of market access for competing search apps in contravention of Section 4(2)(c) of the Act.

3. Google has leveraged its dominant position in the app store market for Android OS to protect its position in online general search in contravention of Section 4(2)(e) of the Act.

4. Google has leveraged its dominant position in the app store market for Android OS to enter as well as protect its position in the non-OS specific web browser market through Google Chrome App and thereby contravened the provisions of Section 4(2)(e) of the Act.

5. Google has leveraged its dominant position in the app store market for Android OS to enter as well as protect its position in the Online Video Hosting Platform (OVHP) market through YouTube and thereby contravened provisions of Section 4(2)(e) of the Act.

The Commission also took certain measures to prevent Google from abusing its dominant position and directed Google to do the following:

1. Original Equipment Manufacturers (OEM) should not be restrained from choosing from amongst Google’s proprietary applications to be pre-installed and should not be forced to pre-install a bouquet of applications, and decide the placement of pre-installed apps, on their smart devices.

2. Licensing of Play Store (including Google Play Services) to OEMs shall not be linked with the requirement of pre-installing Google search services, Chrome browser, YouTube, Google Maps, Gmail, or any other application of Google

3. Google shall not offer any monetary/ other incentives to, or enter into any arrangement with, OEMs, Google shall not impose anti-fragmentation obligations on OEMs,  and it shall not incentivize or otherwise obligate OEMs for not selling smart devices based on Android fork

4. Google shall not restrict uninstalling of its pre-installed apps by the users. Further, it shall allow the users, during the initial device setup, to choose their default search engine for all search entry points, and shall allow the developers of app stores to distribute their app stores through the Play Store