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In one of its very significant intervention in digital markets, the Competition Commission of India (CCI) on Thursday sanctioned Google for its anticompetitive practices in multiple markets in the android mobile device ecosystem.
Apart from imposing a provisional monetary penalty of ₹1,337.76 crore on Google for violating Section 4 of the Competition Act, CCI also issued a series of directions to the tech giant to bring its conduct in accordance with the antitrust law. Google has been given 30 days’ time to provide requisite financial details and supporting documents.
Click here to read the CCI’s press release
The ruling is expected to usher in fundamental changes in the business behaviour of Google, said experts.
In arriving at this decision, CCI examined various practices of Google with respect to licensing of its mobile operating system (Android) and various proprietary mobile applications (Play Store, Google Search, Google Chrome, YouTube, etc.). Smart mobile devices need an operating system (OS) to run applications (apps) and programs. Android is one such mobile operating systems which was acquired by Google in 2005.
It maybe recalled that CCI had, in 2019, ordered an investigation against Google for its anticompetitive practices. The scope of investigation pertained primarily to two agreements — the Mobile Application Distribution Agreement (MADA) and the Anti Fragmentation Agreement (AFA) which were entered into by the original equipment manufacturers (OEMs) of Android OS with Google.
Under the AFA, OEMs were restricted from developing and marketing the incompatible modified version of Android OS, Android forks, on other devices, which was alleged to restrict access to potentially superior versions of Android OS.
AFA is a pre-condition to signing the MADA. It was further alleged in the complaint filed before CCI that while signing the MADA is optional, OEMs are required to pre-install Google’s own applications in order to get any part of Google Mobile Services (GMS) — apps such as Maps, Gmail and Youtube — thereby hindering development of rival applications.
CCI, on Thursday, said the markets should be open for competition on merits and the onus is on the dominant players (Google) that their conduct does not impinge this competition on merits. By virtue of various agreements executed by Google with OEMs, it ensured that users continued to use its search services on mobile devices which facilitated un-interrupted growth of advertisement revenue for Google.
Further, it also helped Google to further invest and improve its services to the exclusion of others. Thus, the underlying objective of Google in imposing various restrictions via MADA, AFA/ ACC and revenue sharing agreements (RSAs) was to protect and strengthen its dominant position in general search services and thus, its revenues via search advertisements, noted CCI.
“We are not in a position to offer comment now,” said a Google India spokesperson.
To ensure market correction, CCI issued a series of directions to Google which included:
(i) OEMs shall not be restrained from choosing from among Google’s proprietary applications to be pre-installed and should not be forced to pre-install a bouquet of applications, and deciding the placement of pre-installed apps, on their smart devices.
(ii) 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.
(iii) Google shall not deny its Play Services APIs to disadvantage OEMs, app developers and its existing or potential competitors. This would ensure interoperability of apps between Android OS which complies with compatibility requirements of Google and Android Forks. By virtue of this remedy, the app developers would be able to port their apps easily onto Android forks.
(iv) Google should not offer any monetary/ other incentives to or enter into any arrangement with OEMs for ensuring exclusivity for its search services.
(v) Google shall not impose anti-fragmentation obligations on OEMs, as presently being done under AFA/ ACC. For devices that do not have Google’s proprietary applications pre-installed, OEMs should be permitted to manufacture/ develop Android forks based smart devices for themselves. Google would be at liberty to prescribe reasonable, fair and proportional measures that would only be applicable to devices which have Google’s proprietary applications pre-installed.
(vi) Google should not incentivise OEMs for not selling smart devices based on Android forks.
(vii) Google should not restrict un-installing of its pre-installed apps by users.
(viii) Google should allow 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 steps possible.
(ix) Google shall allow developers of app stores to distribute their app stores through Play Store.
(x) Google shall not restrict the ability of app developers, in any manner, to distribute their apps through side-loading.
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