The legal imbroglio between Google and the Competition Commission of India (CCI)[1], the apex regulatory body tasked with overseeing antitrust affairs, emerges as a seminal conflict entailing the technology giant, Google. This litigation conspicuously underscores Google’s purported utilization of its dominant position within the Android mobile device milieu.
LEGAL PROVISION REGARDING THE DOMINANT POSITION
Section 4 of the Competition Act, 2002, elucidates on the prevention of the exploitation of dominant market positions by enterprises. It proscribes activities that unjustly impede competition or detrimentally impact consumers. The initial provision prohibits enterprises wielding dominance from imposing inequitable terms or pricing structures during transactions, thereby averting the manipulation of market dynamics to their advantage. The subsequent clause denounces the practice of charging predatory prices, a strategy wherein prices are set at levels intended to eliminate competitors, consolidating the dominant firm’s control over the market. The final clause of Section 4 condemns enterprises from constraining production, markets, or technological advancements to the detriment of consumers, safeguarding against practices that could stifle innovation, curtail consumer options, or artificially inflate prices.
Collectively, these provisions endeavor to establish equitable market conditions, nurturing robust competition, innovation, and consumer well-being. Breaches of Section 4 may incur penalties administered by the Competition Commission of India (CCI), including fines or directives mandating the cessation of exploitative practices. The stringent enforcement of this statute is imperative to uphold a competitive market landscape and safeguard the interests of consumers and smaller market players against the dominance wielded by larger enterprises.
BACKGROUND OF THE CASE
The legal proceedings were instigated on August 28, 2018, when Umar Javeed, Sukarma Thapar, and Aaqib Javeed, acting as complainants, lodged a petition under Section 19(1)(a)[2] of the Competition Act, 2002 with the Competition Commission of India (CCI). Their allegations posited that Google wielded a dominant position within India’s realm of the Android-based smartphone market and was embroiled in activities detrimental to competitive dynamics.
The complaint delineated four distinct markets impacted:
– Marketable Smart Mobile Operating Systems
– Platforms for Applications on the Android Mobile Operating System
– Digital Spaces for Hosting Video Content
– Services for Online General Web Searches
Following an examination of the complaint, the CCI convened an initial session on January 8, 2019. Subsequently, on April 16, 2019, the Commission directed the Director General to commence an exhaustive inquiry pursuant to Section 26(1)[3] of the Competition Act.
FACTS OF THE CASEÂ Â Â
Google’s imposition of a requirement on smartphone and tablet manufacturers to exclusively pre-install Google’s suite of applications and services, thereby obstructing the development and entry of rival mobile apps or services into the market.
Among the array of mobile applications and services provided by Google to original equipment manufacturers (OEMs) of mobile devices are the Google Play Store, Google Search App, YouTube, and Google Chrome Browser.
To access Google Mobile Services (GMS) beyond the basic Android version, an OEM must enter into a Mobile Application Distribution Agreement (MADA). This agreement mandates the pre-loading of specific Google apps and dictates their placement on the device, thereby limiting the manufacturer’s freedom in selecting apps, even if they only require a subset of Google’s offerings.
The licensing agreement for the Play Store, which grants access to both Google’s proprietary apps and third-party apps on Android devices, is contingent upon the pre-installation of Google Search and its designation as the default search service.
Additionally, Google is alleged to have engaged in various anti-competitive practices aimed at solidifying its dominant position in markets such as Online General Web Search Services and Online Video Hosting Platforms (specifically through YouTube), whether directly in those markets or in ancillary markets.
ARGUMENTS PUT FORWARD BY GOOGLE
Google has posited several primary contentions in rebuttal to the accusations leveled against it:
– Google contends that the conceptual framework utilized to delineate market boundaries and ascertain dominance within general search services is inappropriate when applied to the alleged misconduct it faces.
– The compulsory inclusion of a suite of its applications and services, such as Google Search, on the default home screen pursuant to the Mobile Application Distribution Agreement, is portrayed as a compensatory measure for Google’s investments in the Android ecosystem.
– Google asserts that end-users maintain the ability to readily access competitive applications through the Google Play Store, emphasizing the accessibility of alternatives.
– The pre-installation of Google Mobile Services (‘GMS’) applications on smartphones is depicted as having minimal impact on Indian Android users. Google further argues that the prevalent adoption of competing applications by Indian consumers mitigates any potential favoritism towards the current market state in India.
– The exclusivity of Google Mobile Services (‘GMS’) applications to the Play Store, rather than being distributed through alternative Android app stores, is justified by concerns regarding security vulnerabilities, malware, and substandard user experiences that may not meet Google’s rigorous standards of quality, security, and reliability.
ANALYSIS BY THE COMPETITION COMMISSION OF INDIA (CCI)
The Competition Commission of India (CCI) conducted an exhaustive examination of Google’s practices concerning the licensing of the Android mobile operating system and various proprietary mobile applications such as Play Store, Google Search, Google Chrome, and YouTube. In its assessment, the CCI primarily focused on five key markets:
- The market for licensable Operating Systems (OS) for intelligent mobile devices in India.
- The market for app stores dedicated to the Android smart mobile OS in India.
- The market for general web search services in India.
- The market for mobile web browsers is not specific to OS in India.
- The market for online video hosting platforms (OVHP) in India.
Furthermore, the CCI reached the following conclusions:
– Initially, the mandatory pre-installation of the entire Google Mobile Suite (GMS) under the Mobile Application Distribution Agreement (MADA) without the option for uninstallation and their immediate introduction to the market constitutes the imposition of unjust conditions on device manufacturers. This action is deemed to contravene Section 4(2)(a)(i)[4] of the Competition Act. Additionally, these obligations are perceived as supplementary and in violation of Section 4(2)(d)[5] of the Competition Act.
– Subsequently, Google’s prolonged dominance in the online search market led to the exclusion of competing search applications, thus denying market access, a contravention of Section 4(2)(c)[6] of the Competition Act.
– Thirdly, Google utilized its dominant position in the app store market for the Android OS to penetrate and safeguard its position in the non-OS specific web browser market through the Google Chrome App, thereby violating the provisions of Section 4(2)(e) [7]of the Competition Act.
– Furthermore, Google leveraged its dominant position in the app store market for the Android OS to penetrate and safeguard its position in the OVHP market through YouTube, contravening the provisions of Section 4(2)(e) of the Competition Act.
– Finally, by conditioning the pre-installation of Google’s proprietary apps, particularly the Google Play Store, on the signing of agreements for all Android devices, Google restricted the ability and incentive of device manufacturers to develop and sell devices operating on alternative Android versions (i.e., Android forks). This limitation impeded technical or scientific progress to the detriment of consumers, in violation of Section 4(2)(b)(ii)[8] of the Competition Act.
DECISION BY THE COMPETITION COMMISSION OF INDIA (CCI)
In alignment with the stipulations of Section 27 of the Competition Act, the Competition Commission of India (CCI) has levied an interim financial sanction of INR 1,337.76 crore on Google for breaches of Section 4 of the Act, mandating the remittance of the penalty sum within a sixty-day period following the issuance of this directive.
Moreover, Google has been allotted a thirty-day window to submit the necessary financial documentation and corroborative evidence. The CCI has recommended several corrective actions:
- Original Equipment Manufacturers (OEMs) shall retain the liberty to select from Google’s proprietary applications for pre-installation without the compulsion to preload a collective set of applications, including the autonomy to determine the positioning of such pre-installed apps on their devices.
- The provision of the Play Store (inclusive of Google Play Services) to OEMs should not be contingent upon the mandatory pre-loading of Google search services, the Chrome browser, YouTube, Google Maps, Gmail, or any other Google applications.
- Google is prohibited from offering any financial or other forms of incentives to OEMs or engaging in any agreements to secure exclusivity for its search services.
- Google must cease the enforcement of anti-fragmentation agreements (AFA/ACC) against OEMs. Manufacturers should be authorized to produce/develop devices powered by alternative Android versions (Android forks) without pre-installed Google proprietary applications.
- Google is to ensure that app developers are not hindered in any way from disseminating their applications via side-loading.
- Google shall not inhibit the uninstallation of its pre-loaded applications by end-users.
- During the initial setup of devices, Google must provide users the option to select their preferred default search engine across all search access points. Furthermore, users should be afforded the ease to modify default settings on their devices through minimal steps.
- Google is required to permit app store developers to offer their app stores via the Play Store.
- Google must not impede app developers from distributing their applications through side-loading, reinforcing the earlier stipulation for open distribution channels.
Reference(s):
[1] Google LLC v. Competition Comm’n of India, 2023 SCC OnLine NCLAT 1 (India).
[2] Competition Act, 2002, No. 12 of 2003, § 19(1)(a) (India).
[3] Competition Act, 2002, No. 12 of 2003, § 26(1) (India).
[4] Competition Act, 2002, No. 12 of 2003, § 4(2)(a)(i) (India).
[5] Competition Act, 2002, No. 12 of 2003, § 4(2)(d) (India).
[6] Competition Act, 2002, No. 12 of 2003, § 4(2)(c) (India).
[7] Competition Act, 2002, No. 12 of 2003, § 4(2)(e) (India).
[8] Competition Act, 2002, No. 12 of 2003, § 4(2)(b)(ii) (India).
