CCI Finds Google Guilty Of Abusing Dominant Position; Imposes Rs 1,337-Crore Penalty
Google has been asked to fix its behavior. It can't mandate pre-installation of apps and can't force users to use Google search.
The Competition Commission of India has found Google guilty of abusing its dominance in the Android mobile device ecosystem, and online search market. The regulator has imposed a penalty of Rs 1,377 crore on the global tech giant and also directed to cease and desist from indulging in anti-competitive behaviour.
The order is an outcome of an investigation which began in 2019. The case came to the CCI when three consumers of Android smartphones complained that Google LLC and Google India Pvt. contravened the competition law by abusing their dominant position in the mobile operating system market.
Now, the competition regulator has come to the same conclusion.
It has pointed out that Google is dominant in five markets: licensable operating system for smart mobile devices in India; app store for Android mobiles; general web search services, non-OS specific mobile web browsers; and market for online video hosting platform.
After establishing dominance, the regulator examined Google's conduct, and found its behaviour abusive in all the markets.
It looked at the various agreements android mobile manufacturers sign with Google, such as the Mobile Application Distribution Agreement or MADA, Anti-fragmentation Agreement, Android Compatibility Commitment Agreement, Revenue Sharing Agreement, etc. Each of these agreements became the basis on which the CCI found Google guilty.
For instance, the MADA assured that the most prominent search entry points—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, the regulator pointed out. Similarly, the tech major secured significant competitive edge over its competitors, in relation to its another revenue-earning app, YouTube, in the Android devices.
"The competitors of these services could never avail the same level of market access which Google secured and embedded for itself through MADA," the CCI said.
Network effects, coupled with status quo bias, create significant entry barriers for competitors of Google to enter or operate in the concerned marketsCCI
The Revenue Sharing Agreement helped Google to secure exclusivity for its search services to the total exclusion of competitors, the regulator found.
Consequently, the CCI noted, these agreements guaranteed a continuous access to search queries of mobile users which helped not only in protecting the advertisement revenue but also to reap the network effects through continuous improvement of services, to the exclusion of competitors.
With these agreements in place, the competitors never stood a chance to compete effectively with Google and ultimately these agreements resulted in foreclosing the market for them as well as eliminating choice for users.CCI
And so, besides imposing a penalty, the regulator has directed Google to amend its conduct. To that end, it passed the following directions:
OEMs can choose from Google’s proprietary applications to be pre-installed. They should not be forced to pre-install a bouquet of applications, and can decide the placement of pre-installed apps on their smart devices.
Licensing of Play Store 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.
Google shall not deny access to its Play Services APIs to disadvantage OEMs, app developers and its existing or potential competitors.
It cannot offer any monetary, other incentives to OEMs for ensuring exclusivity for its search services.
Google shall not impose anti-fragmentation obligations on OEMs.
The CCI has said Google cannot restrict un-installing of its pre-installed apps, and will have to allow users to choose their default search engine during the initial device setup. It has to allow the developers of app stores to distribute their app stores through Play Store. And it cannot restrict app developers to distribute their apps through side-loading.
In response to BQ Prime's queries, Google said that "Android has created more choice for everyone, and supports thousands of successful businesses in India and around the world. The CCI's decision is a major setback for Indian consumers and businesses, opening serious security risks for Indians who trust Android's security features, and raising the cost of mobile devices for Indians. We will review the decision to evaluate next steps".
(Updated to include Google's response)