ICC fines Google for abuse of dominant position – India

The Competition Commission of India (hereinafter after CCI) adopted an order dated 20 October 2022, imposing a monetary penalty of INR 13.37 billion (USD) on Google for abusing its dominant position in several markets in the Android mobile device ecosystem under the section 27[1] of the Competition Act, 2002 (hereinafter the Law). In addition to the monetary penalty, CCI had further issued a cease and desist order against Google for engaging in acts contrary to Section 4[2] of the said law.

Brief history of the subject

In the present information filed by the informants, that is to say. Mr. Umar Javeed, Ms. Sukarma Thapar and Mr. Aaqib Javeed under Section 19(1)(a) of the Competition Act 2002 against Google LLC and Google India Private Limited (below after Google) invoking the abuse of Google’s dominant position in the mobile operating system relating to the markets by concluding restrictive agreements in contravention of the provisions of Article 4[3] of the said law.

Understanding “Abuse of Dominant Position” with the context of the said case[4]

Dominant position: a position of strength, which a company enjoys, on the relevant market, in India, which enables it to

  • Act independently of the competitive forces prevailing in the relevant market; Where
  • Affect its competitors or consumers or the relevant market in its favour.

Article 4 of the competition law provides that there is abuse of a dominant position when a company-

  • Imposing unfair or discriminatory conditions in the purchase or sale of goods or services or the price in the purchase or sale of goods or services;
  • Limits or restricts the production of goods or services or the technical or scientific development of goods or services to the detriment of consumers;
  • Engages in practices resulting in denial of market access;
  • Predatory pricing;
  • Uses its dominant position in a relevant market to enter or protect another relevant market.

In violation of the above terms, Google dictated its terms to app developers, forcing them to compulsorily use its own “discriminatory practices” by imposing unnecessary/restrictive contract terms on app developers and OEMs regarding APIs. Play service, anti-fragmentation obligations, impacting the underlying competition in the market.

Allegations Alleged by Informants

  • Google’s mandatory installation of its own applications in order to obtain any part of smartphones manufactured/sold/exported/traded in India is a clear violation of Section 4.[5] read with article 32[6] of the law by hindering the development of competing mobile applications in the market;
  • from google the linking with other applications is an unlawful prevention of competing applications in the company, thus undermining its dominant position in the internal market in violation of Article 4[7] read with section 32 of the Act;
  • from google function of disabling the development of competing versions of Android on other devices restrict access to competing mobile devices on the basis of potentially superior alternative versions, in violation of article 4 read with article 32 of the law, thereby abusing its dominant position to limit competition in the marketplace.
  • Anti-fragmentation agreement (AFA) secured the dominance of Google by prohibiting OEMs from offering their services to Android forks, preventing them from developing or offering any device beyond the control of This led to the unavailability of distribution channels for their forks since the majority of them were linked to Google.
  • In the same way, Revenue Sharing Agreements (RSA) have obtained exclusive research services from Google of its competitors guaranteeing the protection of advertising revenue and networking effects. These agreements have never allowed competitors to compete effectively in the presence of Google resulting in the elimination of choice for its users.

Arguments raised by Google

  • The competitive constraints faced by Apple: Google’s Android ecosystem and Apple’s iOS ecosystem are fiercely competitive with each other. Since then, Apple’s business has been primarily based on a vertically integrated smart device ecosystem that focuses on selling high-end smart devices with cutting-edge software components. Considering that Google’s activity has proven to be driven by the ultimate intention of increasing the number of users on its platforms to interact with its revenue-generating service e., online research that directly affects the sale of online advertising services by Google.
  • Android is an open source mobile operating system for smartphones and tablets freely used and developed by anyone. The majority of these Indian manufacturers tend to use the Android operating system in alliance with Google Mobile Services (GMS) supported by a collection of apps and application program interfaces (APIs) for functionality smooth on all devices. In order to get the installation right in favor of these applications on Android devices, a mutual agreement is made with Google to avoid any unnecessary hazard on the part of end users.
  • Mandatory pre-installation of applications and services in the default screen of Mobile Application Distribution Agreementyou (hereinafter MADA) acts as a promotional incentive for pay on Android platforms.
  • In addition, end users have the choice whether or not to download competing apps from the Play Store for which the process has also been simplified. Competing applications are unable to overcome the status quo through users reluctant to download their applications.

Director General’s Findings

  • Pre-installation of a full GMS suite under MADA led to violation of Section 4(2)(a)(i)[8] and paragraph 4(2)(d)[9] of the Act by imposing unfair conditions on device manufacturers.
  • The pre-installation of Google’s proprietary applications when signing the AFA/ACC for all manufacturers/distributors has greatly affected the market for device manufacturers, thereby limiting their technical and scientific development.
  • Google’s Play Store policies were found to be one-sided, ambiguous, vague, biased, and arbitrary, as argued by the chief executive. However, from google conduct consisting in imposing unfair discriminatory practices by restricting the development of applications to the detriment of its users constituted a clear violation of Article 4(2)(a)(i), Article 4(2)(b)[10]and section 4(2)(C)[11] of the law.

The managing director thus found Google be in a dominant position with respect to the rest of the competitors in the market and found to be contrary to the provisions of Article 4(2)(a)(i), Article 4(2)(b), Article 4 (2)(c) , paragraph 4(2)(d)[12] and paragraph 4(2)(e)[13] of the law.

Observations made by the Competition Commission of India

The Competition Commission of India has conducted a detailed analysis of the information and made certain observations regarding the allegations mentioned below:

Apart from the financial penalty, CCI also ordered Google to establish a portal offering options for the default search engine in the initial phase to avoid speculation in the future.

  • Third-party billing services

The ICC further requested Google to put in place a transparent policy regarding the data collected on this platform, its use and the risk of sharing this information with other entities and application developers.

  • Revenue Sharing Agreements (RSA)

It was also held by the ICC that the existence of revenue-sharing agreements (hereinafter RSA) between OEMs and Google acted as an advantage for the latter to obtain the exclusive veil of information vis-à-vis its competitors.

Apart from these, various other guidelines have been issued regarding anti-fragmentation obligations and licensing of Play Store to OEMs, such as flexible default settings and easy distribution of apps through the plat store in order to ensure market correction and the interests of justice as soon as possible.

The CCI has a period of thirty days to provide the financial and supporting information requested.

Mistakes to avoid

Conclusion

The ICC ruling may be a major setback for its Indian users as Android has provided a lot of opportunities to support and promote business transactions in India.

Additionally, the security risk at such reasonable prices may be another downside that may accompany CCI’s recent order.

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