India’s fair trade regulator – the Competition Commission of India (CCI) – has imposed a monetary penalty of Rs 1337.76 crore on Google for abusing its dominant position in multiple markets in the Android Mobile device ecosystem. The fair trade regulator has also directed the tech giant to cease and desist from unfair business practices. The CCI said it has also directed Google to modify its conduct within a defined timeline.
Mobile devices need an operating system (OS) to run applications (apps) and programs. Android is one such mobile operating system that was acquired by Google in 2005. The CCI examined various practices of the tech giant with regard to licensing of this Android operating system and various proprietary mobile applications of Google like Play Store, Google Search, Google Chrome, YouTube).
During the inquiry, Google argued about the competitive constraints being faced by Apple. The commission said Apple’s business is primarily based on a vertically integrated smart device ecosystem which focuses on the sale of high-end smart devices with state-of-the-art software components, while 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 the sale of online advertising services by Google”.
The CCI said mandatory pre-installation of the entire Google Mobile Suite (GMS) under the Mobile Application Distribution Agreement or MADA (with no option to un-install the same) and their prominent placement amounts to imposition of an unfair condition on the device manufacturers and thereby in contravention of the provisions of Section 4(2)(a)(i) of the Act.
In relation to app stores, the CCI noted that the demand for the same comes from three different sets of consumers – smart device OEMs (original equipment manufacturers) who wish to install an app store to make their smart devices commercially viable and marketable; app developers who want to offer their services to the end-users; and the end users to wish to access app stores to access content or avail other services.
The trade regulator examined the substitutability between Google’s Play Store for Android OS and Apple’s App Store for iOS from the perspective of all three demand constituents “and found that there is no substitutability between Google’s Play Store and Apple’s App Store”.
The CCI said there might be some degree of competition between the two mobile ecosystems – Android and Apple. However, it said that too is also limited at the time of deciding which device to buy. At that stage also, the primary and the most significant factor in the mind of an end user is the hardware specification and the device price, the regulator said.
“Based on its assessment, the CCI found Google to be dominant in all the above-mentioned relevant markets,” the regulator said.
