The Competition Commission of India (CCI) has imposed a significant monetary penalty on Google for engaging in anti-competitive practices. The CCI found that Google had been engaging in anti-competitive practices in relation to Android mobile devices and Google Play Store Policies. This is a violation of the competition laws in India, which prohibit companies from abusing their dominant position to stifle competition.
On October 20th, 2022, the CCI imposed a penalty of INR1,337 Crores on Google for abusing its “dominant position in multiple markets in the Android mobile device ecosystem under Section 4 of the Competition Act, 2002.” Additionally, a separate fine amounting to INR 936.44 Crores was also imposed on Google by the CCI five days later, for “abusing its dominant position with respect to its Play Store policies”. The company was directed to cease and desist from unfair business practices.
Google had initially filed an appeal with the NCLAT against the CCI order on December 23rd, 2022. However, NCLAT had declined to stay the antitrust watchdog’s order, to which Google in its latest appeal contended that, the NCLAT direction to treat the 10 per cent payment as a condition for admission is ex-facie illegal. Google’s NCLAT Appeal subject to a pre-deposit of 10 per cent ought to be set aside, the tech giant has appealed to the Supreme Court.
The Supreme Court, However, on January 19th, 2023, refused to interfere with an order passed by National Company Law Appellate Tribunal (NCLAT) and declined to grant stay on the directions issued by Competition Commission of India (CCI) in its October 20th, 2022 ruling. While not being inclined to interfere with the order of NCLAT declining interim relief, the apex court extended the time for compliance of CCI directions by Google by a further period of one week. The court also directed NCLAT to dispose of the appeal preferred by Google by March 31, 2023.
“ABUSING ITS DOMINANT POSITION IN ANDROID CELL MARKET”
In 2019, as response to customer complaints regarding cell phone’s running the Android operating system, the CCI ordered a probe into Google’s unfair business practises. The Mobile Application Distribution Agreement (MADA) and the Anti-Fragmentation Agreement (AFA) between Google and the Original Equipment Manufacturers (OEMs) of the Android OS, served as the foundation for the accusations against Google. Due to the required pre-installation of the whole Google Mobile Suite (GMS) under MADA and the lack of an uninstall option, the CCI claimed that Google had violated the Indian Competition Laws.
GMS is a set of Google programmes and Application Programming Interfaces (APIs) that aid in facilitating and functioning across many platforms. Google’s flagship products, such as Google Search, Google Chrome, YouTube, Play Store, and Google Maps, are all included in GMS.
Mandatory pre-installation of the entire Google Mobile Suite (GMS) under MADA (with no option to uninstall it) and prominent placement was determined to be an unfair condition imposed on device manufacturers. It is a common opinion that, Google shall not restrict un-installing of its pre-installed apps by users and 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 possible steps.
CCI determined that this reduced device manufacturers’ ability and incentive to develop and sell devices running alternative versions of Android, i.e., Android forks, and thus, limited technical or scientific development to the detriment of consumers, in violation of competition law.
“DISCRIMINATORY PRACTICES IN GOOGLE PLAY STORE”
The investigation of Google’s payment system used in the Play Store began in 2020, making access to the Play Store contingent on being required to use the Google Play Billing System (GPBS) for in-app purchases and premium apps is illogical, arbitrary, and serves no valid economic interest. The regulator stated in its order that “app developers are left without the natural option to choose the payment processor of their choice from the open market,” and that “During the investigation it was found that Google is engaging in discriminatory practises by not using GPBS for its own applications, i.e., YouTube.”
Currently, Google’s policies mandate application developers to use GPBS exclusively for paying and processing, both apps distributed through the Google Play Store as well as for some transactions made by users of apps after they have downloaded them. Furthermore, app developers may neither provide users with a direct link to a webpage containing an alternative payment method within an app, nor may they use language that encourages a user to purchase the digital item outside of the app.
It is so that in case, the app developers do not comply with Google’s policy of using GPBS, they are not permitted to list their apps on the Play Store and thus, would lose out the vast pool of potential customers in the form of Android users. Hence, the CCI in the interest of justice imposed @7% of its average relevant turnover amounting to ₹936.44 crore upon Google on provisional basis, for violating Section 4 of the Act.
Five different markets were looked upon by the competition commission, including
- Licensable OS for smart mobile devices in India
- App stores market for Android in India
- General web search services in India
- Non-OS-specific mobile web browsers in India
- Online video hosting platforms (OVHPs) in India.
The competition commission noted that in all the markets, Google deliberately moved to consolidate its position and suppress competition, which led to the massive penalty of INR 1,337.76 Cr.
The Google Play Billing System makes sure that if the app developers do not comply with Google’s policy of using GPBS, they are not permitted to list their apps on the Play Store and thus, would lose out the vast pool of potential customers in the form of Android users, which was found to be an abuse of dominance by the CCI and was fined Rs. 936.44 crore under Section 4 of Competition Act, 2002.
Accordingly, in terms of the provisions of Section 27 of the Act, the Commission has imposed monetary penalty as well as issued cease and desist order against Google for indulging in anti-competitive practices that have been found to be in contravention of Section 4 of the Act.
Google, however, has stated that it will appeal the CCI’s ruling, claiming that its practices were “in compliance with Indian competition laws.” The company has argued that it has always been transparent about its practices, and its app distribution policies have helped in increasing competition and choice for consumers in the market.
Google maintained its dominant position in the online search market, denying competing search apps market access. Furthermore, Google abused its dominant position in the Android OS app store market in order to protect its position in general online search.
In order to end its anti-competitive behaviour, Google was handed a cease-and-desist order by the CCI. The Google Mobile Suite (GMS) installation mandate, which required OEMs installation on every Android mobile device was found to be abuse of dominance, thereby attracting a fine by the competition.
In conclusion, the CCI’s decision serves as a warning and prevents dominant tech companies from abusing their market power to stifle competition and harm consumers. It acts as a reminder of importance of fair competition in the digital economy and highlights the need for regulators to closely monitor the practices of dominant tech companies to ensure that they do not abuse their power to stifle competition. It also highlights the need for a comprehensive regulatory framework for the digital economy in India to ensure that consumers have a level playing field and are not harmed by anti-competitive practices. The Supreme Court is also conducive with such ideology of the CCI and has reflected the same in its latest ruling on the Google case.
 Section 4. Abuse of dominant position.—
(1) No enterprise shall abuse its dominant position.
(2) There shall be an abuse of dominant position under sub-section (1), if an enterprise,—
(a) directly or indirectly, imposes unfair or discriminatory—
(i) condition in purchase or sale of goods or services; or
(ii) price in purchase or sale (including predatory price) of goods or service; or
Explanation.—For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of goods or services referred to in sub-clause (i) and unfair or discriminatory price in purchase or sale of goods (including predatory price) or service referred to in sub-clause (ii) shall not include such discriminatory conditions or prices which may be adopted to meet the competition; or
(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; or
(c) indulges in practice or practices resulting in denial of market access; or
(d) makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts; or
(e) uses its dominant position in one relevant market to enter into, or protect, other relevant market.
Author – Shyamli Shukla