On 20th October 2022, the Competition Commission of India (CCI) imposed a penalty of Rs. 1,337.76 crores on Google for abusing its dominant position in multiple markets in the Android Mobile device ecosystem, apart from issuing cease and desist orders. The CCI also directed Google to modify its conduct within a defined timeline. Smart mobile devices need an operating system (OS) to run applications (apps) and programs. Android is one such mobile operating system that Google acquired in 2005. In the instant matter, the CCI examined various practices of Google w.r.t. licensing of this Android mobile operating system and various proprietary mobile applications of Google (e.g., Play Store, Google Search, Google Chrome, YouTube, etc.).
Google was found to be misusing its dominant position in the tech market, and the same was the reason behind the penalty. Google argued about the competitive constraints being faced from Apple. In relation to understanding the extent of competition between Google’s Android ecosystem and Apple’s iOS ecosystem, the CCI noted the differences in the two business models, which affect the underlying incentives of business decisions. Apple’s business is primarily based on a vertically integrated smart device ecosystem that focuses on the sale of high-end smart devices with state-of-the-art software components. In contrast, 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 searches, which directly affects the sale of online advertising services by Google. It was seen that google had created a dominant position among the android phone manufacturers as they were made to have a set of google apps preinstalled in the device to increase the user’s dependency on google services. The CCI felt that Google had created a dominant position to which they replied that the same operations are done by Apple as well, to which the commission responded that apple is a phone and app manufacturer and they have Apple-owned apps in Apple devices only, but Google here in had made a pseudo mandate for android manufactures to have the google apps pre-installed which is, in turn, a possible way of disrupting the market equilibrium and violative of market practices. The CCI imposed a penalty of Rs. 1,337.76 for abusing its dominant position in multiple markets in India, CCI delineated the following five relevant markets in the present matter –
- The market for licensable OS for smart mobile devices in India
- The market for app store for Android smart mobile OS in India
- The market for general web search services in India
- The market for non-OS specific mobile web browsers in India
- The market for online video hosting platforms (OVHP) in India.
Supreme Courts Opinion
In October 2022, the Competition Commission of India (CCI) ruled that Google, owned by Alphabet Inc, exploited its dominant position in Android and told it to remove restrictions on device makers, including those related to the pre-installation of apps and ensuring exclusivity of its search. Google lost a challenge in the Supreme Court to block the directives, as the learned court refused to put a stay on the imposed penalty, further giving seven days to comply. The Supreme Court has said a lower tribunal—where Google first challenged the Android directives—can continue to hear the company’s appeal and must rule by March 31.
Counterpoint Research estimates that about 97% of 600 million smartphones in India run on Android. Apple has just a 3% share. Hoping to block the implementation of the CCI directives, Google challenged the CCI order in the Supreme Court by warning it could stall the growth of the Android ecosystem. It also said it would be forced to alter arrangements with more than 1,100 device manufacturers and thousands of app developers if the directives kick in. Google has been concerned about India’s decision as the steps are seen as more sweeping than those imposed in the European Commission’s 2018 ruling. There it was fined for putting in place what the Commission called unlawful restrictions on Android mobile device makers. Google is still challenging the record $4.3 billion fine in that case. In Europe, Google made changes later, including letting Android device users pick their default search engine, and said device makers would be able to license the Google mobile application suite separately from the Google Search App or the Chrome browser.
As the world goes deeper into cyberspace, the big tech companies have more control over the industry and the markets, but the same should not turn into anarchy in the global markets. The Tech giants need to be made aware that compliance is the utmost duty for all companies, and enforcement of the law of the land will be maintained no matter what. Earlier India lacked policies and legislation to govern cyberspace, but in the recent proactive stance by the govt, a lot of new bills have been tabled, one of them being the Intermediary Rules 2021, which has laid down the obligations nand duties of the companies by setting up an intermediary in the country. Such bills coupled with such crucial judgments on tech giants will act as a test and barrier for other tech companies who try to flaunt the rules and avoid compliance.