The ₹1,338 crore fine is just the tip of the iceberg as CCI orders Google to take several measures to curb its anti-competitive behavior

• The Competition Commission of India has imposed a penalty of ₹1,338 crore on Google for abusing its dominant position.
• The antitrust watchdog has also directed Google to implement certain measures.
• The measures include allowing OEMs to offer their app store on the play store, allowing users to uninstall its apps, and allowing users to choose their default search engine during initial device setup.

The Competition Commission of India (CCI), the country’s antitrust watchdog, has come down heavily on Google, one of the world’s richest companies. The CCI has imposed a penalty of ₹1,337.76 crore on the search giant for abusing its dominant position in multiple markets with its Android mobile device ecosystem.

In addition to the penalty, the CCI, in its order, has also issued a cease and desist and prescribed ten measures that Google must take with a defined timeline.

"The CCI's order for fair practices in the Mobile industry is a respite for all the stakeholders. We have been waiting and fighting for this day for over a decade. This is fantastic news for all startups in India to build competitive products against the tech giant. As an app store, we are delighted by the decision of being allowed to distribute alternative app stores through the default Android app store, Google Play Store,” said Rakesh Deshmukh, cofounder, Indus OS, a homegrown app store in a statement to Business Insider India.

“We will continue our work towards building a seamless experience for the user, which can only happen once Google allows the same Android permissions, the Play Store has, such as installing from unknown sources, etc. Our fight will continue to build a level playing field for all alternative app stores in the Android universe,” Desjmukh added.

CCI imposes penalty of ₹1,338 crore

The penalty of ₹1,338 crore imposed on Google is one of the highest penalties imposed by the watchdog on a single company.

CCI identifies key markets for Google

The CCI had identified the key markets for Google for the present issue –

• Market for licensable OS for smart mobile devices in India
• Market for app store for Android smart mobile OS in India
• Market for general web search services in India
• Market for non-OS specific mobile web browsers in India
• Market for online video hosting platform (OVHP) in India

Google’s agreements provide it a “significant competitive edge”

CCI has noted that Mobile Application Distribution Agreement (MADA), Anti-fragmentation Agreement (AFA), Android Compatibility Commitment Agreement (ACC), Revenue Sharing Agreement (RSA) and agreements signed by Google and Original Equipment Manufacturers (OEMs) provide it a “significant competitive edge.”

MADA

MADA enables Google to ensure that prominent search entry points such as the search app, widget, and Google Chrome browser are pre-installed on Android devices, which provides the search giant a “significant competitive edge” over its competitors. In addition, the company also received an advantage for YouTube as Android devices come pre-installed with the application.

CCI noted that Google’s competitors would never be able to avail the same level of market access as Google, creating a strong entry barrier for competitors.

AFA

The CCI has held that the Anti-fragmentation agreement (AFA) and ACC prohibit OEMs from offering a customized Android OS. AFA prevents developers from installing or developing “Android forks” or modified versions of Android.

This is not the first anti-trust regulator to criticize Google for AFA. Last year, the Korea Fair Trade Commission (KFTC) imposed a $177 million (approx. ₹1,466 crore) fine on Google over abusing its market dominance through AFA.

RSA

The CCI noted that RSAs helped Google to secure “exclusivity for its search services to the total exclusion of competitors.”

“The combined results of these agreements guaranteed continuous access to search queries of mobile users, which helped not only in protecting the advertisement revenue but also to reap the network effects through continuous improvement of services, to the exclusion of competitors,” the CCI said in its release.

“With these agreements in place, the competitors never stood a chance to compete effectively with Google, and ultimately these agreements resulted in foreclosing the market for them as well as eliminating choice for users,” the watchdog added.

CCI issues cease and desist order

The CCI has issued a cease and desist order to Google, ordering it stop these “anti-competitive practices”.

“The Commission has imposed monetary penalty as well as issued cease and desist order against Google from indulging in anti-competitive practices that are in contravention of the provisions of Section 4 of the Act,” the release added.

CCI orders Google to “modify its conduct”

The CCI has also issued a list of directives to Google. The measures aim to reduce the search giant’s anti-competitive practices and make it easier for developers and OEMs to offer their services.

• OEMs shall not be forced to pre-install a bouquet of applications from Google and shall not be restrained from deciding the placement of pre-installed apps on their smart devices.
• Licensing of Play Store and Google Play Services should not be linked with the requirement of pre-installing Google apps such as Search, YouTube, Chrome, Maps, and others.
• Google shall not deny access to its Play Services APIs to disadvantage OEMs, app developers, and its existing or potential competitors.
• Google shall not offer any monetary/other incentives to or enter into any arrangement with OEMs to ensure exclusivity for its search services.
• Google shall not impose anti-fragmentation obligations on OEMs, as presently being done under AFA/ ACC. For devices that do not have Google’s proprietary applications pre-installed, OEMs should be permitted to manufacture/ develop Android forks-based smart devices for themselves.
• Google shall not incentivize or otherwise obligate OEMs for not selling smart devices based on Android forks.
• Google shall not restrict uninstalling of its pre-installed apps by the users.
• Google shall allow the users to choose their default search engine during the initial device setup for all search entry points. Users should be able to easily set and change their devices’ default settings in the minimum steps possible.
• Google shall allow the developers of app stores to distribute their app stores through Play Store.
• Google shall not restrict the ability of app developers, in any manner, to distribute their apps through side-loading.

Some of the measures, such as allowing users to uninstall Google’s apps, not forcing OEMs to install its apps for licensing the Play Store and Play Services, allowing companies to list their app store on the Google Play store, and more may have a huge impact on the company in the long term.

“The measures announced by the CCI may not have a huge impact on Google in the short term as companies will need to invest to make their apps discoverable, and new app stores do not enjoy the reach Google has. In the long term, developers and OEMs may gain from the measures ordered by the CCI,” said Navkendar Singh, Associate Vice President of Devices Research, IDC India, South Asia & ANZ in a statement to Business Insider India.

“If OEMs are allowed to, they are better suited to distribute apps and content via their storefronts. If the order is followed in spirit, it will usher in-app and content distribution innovation on the two dominant mobile platforms: Android and iOS. With Microsoft announcing a mobile gaming platform, there are expectations that other players will follow suit,” said Aditya Kshirsagar, independent tech evangelist, in a statement to Business Insider India.

CCI may revise the penalty in 30 days

The CCI, in its order, has added that the ₹1,338 crore penalty is a provisional amount and has ordered Google to provide requisite financial details and supporting documents for various revenue data points. The watchdog may revise the penalty once Google submits this information.

"Indian developers have benefited from the technology, security, consumer protections, and unrivaled choice and flexibility that Android and Google Play provide. And, by keeping costs low, our model has powered India's digital transformation and expanded access for hundreds of millions of Indians. We remain committed to our users and developers and are reviewing the decision to evaluate the next steps," a Google spokesperson said in a statement to Business Insider India.

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