What CCI’s Investigation Against Google May Focus On
CCI directed an investigation to assess whether Google abused its dominant position in mobile operating system market in India.
Global technology giant Google might be having a deja vu experience. The Indian competition regulator CCI has directed an investigation to assess whether Google abused its dominant position in the mobile operating system market in India. A similar investigation by the European Commission led to a $5-billion fine on Google, which was directed to stop “illegal practices” on contracts with handset makers.
Back home, the investigation has just started, with the Competition Commission of India forming a prima facie opinion, that is an initial view that Google leveraged its position by mandating installation of its proprietary applications and services.
Complaint Against Google
The case came to the CCI when three consumers of Android smartphones complained that Google LLC and Google India Pvt. Ltd. contravened the competition law by abusing their dominant position in the mobile operating system market. Majority of smartphone and tablet manufacturers in India use Google’s Android operating system, as per the informants. Android is an open-source mobile operating system, which means it can be freely used and developed by anyone.
The manufacturers, the informants stated, use Android in combination with a range of Google’s proprietary applications and services, that is the Google mobile services like Google Maps, Gmail, and YouTube, among others. These applications are available only through Google mobile services and cannot be downloaded separately by device manufacturers, they said. To install these applications on Android devices, manufacturers need to enter into certain agreements with Google.
The informants detailed the abusive conduct of Google by pointing out:
- The company engaged in different kinds of anti-competitive practices, either in the market in which they are dominant or in separate markets. The aim is to cement Google’s dominant position in online general web search services and online video hosting platform (through YouTube).
- Google mandates smartphone and tablet manufacturers to exclusively pre-install Google’s own applications or services in order to get any part of Google mobile services in smartphones manufactured, sold, exported and marketed in India. This has hindered the development of rival mobile applications or services.
- It bundles certain Google applications like Chrome, YouTube, search with some of its other applications, thereby preventing market access.
- It prevents development and marketing of competing versions of Android.
Google’s Case
Google stated before the CCI that Android is an open source platform and it does not require manufacturers to sign any agreement to licence it. Original equipment manufacturers can offer Android services without pre-installing any Google app. But if the manufacturers choose to pre-install Google’s apps, the agreement for it is limited in scope, meaning it allows manufacturers to pre-install rival apps and offer them the same or even superior placement on the phone screen.
But since Android is open source, manufacturers may create incompatible variants resulting in fragmentation — fewer developers will write apps for Android, threatening to make it less attractive to users and, in turn, even fewer developers will support Android. This can be prevented only by providing a minimum standard, which is done through an agreement called Android Compatibility Commitment.
CCI’s View
The regulator said Google reduced the ability of device manufacturers to develop and sell devices operating on alternative versions of Android. Google mandated device manufactures to enter into agreements and refused pre-installation of its proprietary applications like Play Store on the devices without these agreements, the CCI said.
“The commission is of prima facie opinion that since Google Play Store is a ‘must have’ app and users expect it to be pre-installed on their devices, marketability of Android devices may get restricted if these agreements are not signed, making these agreement de facto compulsory.”
Google’s conduct of mandating pre-installation of entire Google mobile services suite amounts to imposition of unfair condition on the device manufacturers. It also amounts to prima facie leveraging of Google’s dominance in Play Store to protect the relevant markets such as online general search, the regulator said.
And so, it has directed the director general to conduct a detailed investigation into Google’s behavior and also any individuals responsible for it.
The allegations made against Google before the CCI for its practices in the licensing of the Android operating system are similar to the issues which were previously investigated by the European Commission, Nisha Kaur Uberoi, competition law partner at Trilegal, told BloombergQuint.
The European Commission had concluded that Google had abused its dominant position by mandating pre-installation of its apps and restricting manufacturers from selling smartphones with alternative android versions.
The CCI’s investigation wing will surely look at the factors that led to the European Commission’s order, GR Bhatia, competition law head at L&L Partners, said. The director general will determine the contravention by Google based on metrics like market share, trade practices, nature of covenants in its agreements and business conduct, he said.
During its investigation, the director general is likely to seek detailed information from Google’s competitors, competitors of Android system and smartphone makers about the mandate of pre-installation of Android and how it is impacting their freedom in doing their business.GR Bhatia, Partner, L&L Partners
The director general is likely to requisition copies of relevant agreements to understand the terms, conditions and the restrictions — formal or informal — imposed by Google, Bhatia said.
But, Uberoi said, the investment made by Google for developing the Android ecosystem will also need to be looked.
Any tilt in the balance between consumer welfare and innovation ultimately affects the interests of the consumers. In light of this, the CCI will also need to consider the investment made by Google for developing Android and the choice created for consumers as well as app developers who built their businesses with Android.Nisha Kaur Uberoi, Partner, Trilegal.
Besides India, Google is being investigated by competition regulators in countries like the U.S., Germany and Brazil. The European Commission concluded in July 2018 that Google breached the European antitrust rules by imposing illegal restrictions on Android device manufacturers and network operators.
As per the CCI’s directions, the director general will investigate the licensable mobile operating system market in India. The abuse of dominance by Google will be examined vis-à-vis the impact and position of its competitors in the relevant markets determined by the CCI. The director general may enquire and collect information from:
- Smartphone manufacturers.
- Google’s competitors in the web markets
- Distributors
- Retailers and
- Service providers