Competition commission decision major setback for Indian consumers, businesses: Google on Rs 1,338 crore penalty

A day after CCI slapped a Rs 1,338-crore penalty on Google for abusing dominance, the company said it will review the decision to evaluate the next steps and termed the order as a “major setback” for Indian consumers and businesses.

In its first official response after the CCI order, Google asserted that Android has created more choices for everyone and supports thousands of successful businesses in India and around the world.

“The CCI’s decision is a major setback for Indian consumers and businesses, opening serious security risks for Indians who trust Android’s security features, and raising the cost of mobile devices for Indians,” a Google spokesperson said in an email statement.

Google added that it will “review the decision to evaluate the next steps”.

The competition watchdog on Thursday slapped a steep penalty of Rs 1,337.76 crore on Google for abusing its dominant position in multiple markets in relation to Android mobile devices and ordered the internet major to cease and desist from various unfair business practices.

The regulator, which passed the order after ordering a detailed probe more than three years ago, has also directed Google to modify its conduct within a defined timeline.

Android is a popular open-source, mobile operating system installed by original equipment manufacturers (OEMs) of smartphones and tablets.

Minister of State for IT Rajeev Chandrasekhar said openness, which is free and fair internet, is a firm policy goal for the government.

“Open internet is what India expects – that is an internet where free choice expectations of consumers, is not distorted by the market power of any company – big or small – foreign or Indian,” Chandrasekhar said.

It is pertinent to mention here that CCI, which had started probing the case in April 2019, has directed that OEMs should not be restrained from choosing from among Google’s proprietary applications to be pre-installed and also not be forced to pre-install a bouquet of applications on their smart devices.

In the release, the regulator said it has imposed a penalty of Rs 1,337.76 crore on Google for abusing its dominant position in multiple markets in the Android mobile device ecosystem, apart from issuing the cease and desist order.

Google has been under the regulatory lens of CCI, which is also looking into a few other cases related to the internet major.

The latest order marks a major intervention in digital markets.

The matters pertaining to alleged anti-competitive practices by Google with respect to news content, smart TV and GPay are also before the regulator.

In February 2018, the regulator imposed a fine of Rs 136 crore on Google for unfair business practices in the Indian market for the online search.

CCI Chairperson Ashok Kumar Gupta will be retiring on October 25 and the latest Google ruling is the second major one in as many days.

On Wednesday, the watchdog slapped penalties totalling Rs 392 crore on MakeMyTrip, Goibibo and OYO for unfair business practices.

For the current case, CCI considered five relevant markets in India. They are the markets for licensable OS for smart mobile devices, app store for Android smart mobile OS, general web search services, non-OS specific mobile web browsers and Online Video Hosting Platform (OVHP).

In April 2019, the regulator ordered a detailed probe into the matter following complaints by consumers of Android-based smartphones in the country.

The allegations of unfair business practices pertained to two agreements — Mobile Application Distribution Agreement (MADA) and Anti Fragmentation Agreement (AFA) — which were entered into by the OEMs of Android OS with Google.

CCI said that mandatory pre-installation of the entire Google Mobile Suite (GMS) under MADA, with no option to un-install the same, and their prominent placement amounts to imposition of an unfair condition on the device manufacturers and thereby contravenes competition law.

In a raft of directions, the watchdog said that OEMs should also not be forced in deciding the placement of pre-installed apps on their smart devices.

Licensing of Play Store, including Google Play Services, to OEMs should not be linked with the requirement of pre-installing Google search services, Chrome browser, YouTube, Google Maps, Gmail or any other application of Google, as per a release.

“Google shall not offer any monetary/other incentives to, or enter into any arrangement with, OEMs for ensuring exclusivity for its search services,” it added.

Among others, CCI said Google should not restrict the uninstalling of its pre-installed apps by the users.

“Google shall allow the users, during the initial device setup, to choose their default search engine for all search entry points. Users should have the flexibility to easily set as well as easily change the default settings in their devices, in minimum steps possible,” the release said.