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Update: CCI's Probe into Google: The Wave that Reached India

July 13, 2019

[This update has been brought to you by Saumya Raizada and Shreetama Ghosh, who are Editors at IRCCL.]

 

The Competition Commission of India (CCI) recently launched a probe to investigate the abuse of dominant position by Google, the alleged act being imposition of unfair conditions on manufacturers, stemming from the information filed by the informants, Umar Javeed and Sukarma Thapar. The probe launched by the CCI is only one of the many antitrust cases to have been launched against Google Inc. around the globe, with the European Commission (EC) having recently imposed a hefty fine of  €1.49 billion for its anti-competitive practices in online advertising in March 2019.

 

The Global Clampdown

 

The European Union (EU), over the past few years, has already imposed heavy fines of over €8 billion on Google for having been involved in several anti-trust violations. We set out below certain instances of such sanction.

  • In June 2017, Google was fined €2.42 billion for abusing its dominance in the internet search markets by providing an illegal advantage to its comparison shopping service, Google Shopping, and demoting the rival comparison shopping services while showing search results.

  • In July 2018, Google was fined €4.34 billion for imposing illegal restrictions on Android device manufacturers and mobile network operators (for instance, tie-in provisions) to cement its dominant position in the general internet search market.

  • In the most recent decision, in March 2019, Google was fined €1.49 billion for abusing its dominance by imposing a number of restrictive clauses in its contracts with third-party websites which prevented Google's rivals from placing their search adverts on these websites.

 

Similar antitrust probes have taken place in France and Germany and are on the table for the UK. Further, the Italian antitrust authorities are also investigating Google for an alleged abuse of its dominant position in the smart device sector, and expect to complete their investigation by May 2020. Another likely probe may be initiated by the US Federal Trade Commission and the Justice Department against Google and a number of other technology giants.

 

The Anti-trust Case in India

 

Google Mobile Services (GMS) is a collection of Google applications and Application Programme Interfaces that help support functionality across devices. Some very basic apps used by most android users like Youtube, Google Chrome, Google Play Store are part of GMS which cannot be availed directly if certain allegedly unfair and restrictive agreements namely, (a) Mobile Application Distribution Agreement (MADA) and (b) Anti Fragmentation Agreement (now referred to as the Android Compatibility Commitment) (ACC) are not signed with Google by the manufacturers. The informants viewed this abuse of dominant position was being done with the aim of cementing Google’s dominant position in Online General Web Search Services and Online Video Hosting Platform (through YouTube). This along with the pattern of behavior indicated below was alleged to have been a violation of Section 4 read with Section 32 of the Competition Act 2002 (Act):

  1. Google mandates installations of its own applications or services in order to get any part of GMS in smartphones manufactured in/ sold in/ exported to/ marketed in India;

  2. Google ties some of its services or apps (for example, Google Chrome, Youtube) with its other apps or services leading to a loss of development and market access of rival applications and services when a manufacturer signs the MADA;

  3. Google was being a roadblock in the development and marketing of modified and potentially competing versions of Android (Android forks) by smartphone manufacturers and through its conduct restricting the access to innovative smart mobile devices based on novel Android operating system versions.

 

Google in its defence has stated that only when OEMs themselves choose to preinstall Google mobile apps, the MADA allows them to preinstall the GMS, thereby acting as a facilitator of GMS rather than causing a disruption in the overall Android space. It further submitted that the licensing of Android was not conditional on the signing of the MADA or the ACC (both being optional in nature) making the Android still freely accessible to innovation. It was also pointed out the MADA installation conditions were not exclusive or exclusionary in nature, meaning thereby they did not snatch the screen-space of the other apps which could also be downloaded in the same device and that Google’s pre-installed apps could be uninstalled by the Android users was also argued by Google in its plea. Google was quick to refer how its agreements were rather helping Android compete with other similarly placed platforms for app developers by making the OEMs adhere to a minimum base-line criteria and improving customers’ overall experience with Android phones.

 

To form its prima facie opinion on the facts of the case, the market for licensable smart mobile operating systems was delineated as the relevant product market and the whole of India was chosen to be the relevant geographic market. The relevant market for app stores for android mobile operating systems was taken into consideration by the CCI since the Play Store accounted for more than 90% of the total app installations on Android devices along with the market for online general web search services. The two restrictions pointed out by the CCI in signing of the MADA and the ACC were:

  • To be able to preinstall Google’s proprietary apps, device manufacturers have to commit to comply with the Android Compatibility Definition Document for all devices based on Android manufactured/distributed/sold by them; and

  • In order to be able to pre-install any proprietary app of Google, e.g. Play Store, device manufacturers will have to pre-install the entire suite of Google apps.

 

The CCI while ordering a further investigation in the case by the Director General (DG) pointed out the fact that from the point of view of the end-users of Android phones, the Google Play Store was highly essential, without which the marketability of the phones was likely to be negatively affected thereby making the agreements de-facto compulsory. This, as per the CCI, reduced the ability and incentive of device manufacturers to develop and sell devices operating on alternative versions of Android i.e. Android forks, and thereby limited technical or scientific development relating to goods or services to the prejudice of consumers in contravention of Section 4(2)(b) of the Act. Regarding the tying of apps by Google when a manufacturer signs the MADA, CCI was of the prima facie opinion that mandatory pre-installation of entire GMS suite under MADA amounts to imposition of unfair condition on the device manufacturers and thereby in contravention of Section 4(2)(a)(i) of the Act.

 

With hefty penalties already been issued in other jurisdictions on Google for similar violations, it would be interesting to see how the Indian case pans out. Much would depend on the findings of the DG and for which CCI has given it 150 days from the receipt of the order. This case being one of the very first potentially high profile cases being investigated after the Delhi High Court recently ruled in favour of inclusion of any other important allied information to the issues, if found during the stage of enquiry, it would be interesting to see how things work out for both the parties. What is also noteworthy is that the CCI has given lucid guidelines for the DG to proceed in the case which specifically include investigation into the role of the persons in charge of companies who the DG thinks have played a role in the abuse.

 

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