CCI slaps Rs 1,337.76 crore penalty on Google for unfair trade practices

The Competition Commission of India (CCI) on Thursday imposed a penalty of Rs 1,337.76 crore on Google for allegedly abusing its dominant position in multiple markets in the Android mobile device ecosystem and violating Section 4 of the Competition Act.

The CCI also issued cease and desist order against Google, asking it to refrain from unfair business practices, and directed the tech giant to modify its conduct within a defined timeline.

Google has been given 30 days to provide the requisite financial details and supporting documents. Google’s Android is the dominant operating system (OS) for smartphones in India and globally. The only competition is from Apple’s iOS.

The commission said it imposed the fine as Google allegedly abused its dominant position in five markets — the market for licensable OS for smart mobile devices; app store for Android smart mobile OS; market for general web search services; market for non-OS specific mobile web browsers; and, the one for online video hosting platform (OVHP).

The CCI in its press statement said that it found “Google to be dominant in all the above mentioned relevant markets”.

The CCI has now concluded that mandatory pre-installation of entire Google Mobile Suite (GMS) under mobile application and distribution agreement (MADA), with no option to uninstall it, and its prominent placement amounts to imposition of unfair conditions on device manufacturers and, hence, contravenes provisions of Section 4(2)(a)(i) of the Competition Act, which deals with abuse of dominant position.

The CCI has recommended that original equipment manufacturers (OEMs) should not be restrained from choosing from amongst Google’s proprietary applications to be pre-installed, shouldn’t be forced to pre-install a bouquet of applications, and should be allowed to decide on the placement of pre-installed apps on their smart devices.

In its defence, Google cited the competition it faced from Apple. On this count, the CCI noted: “Apple’s business is primarily based on a vertically integrated smart device ecosystem which focuses on sale of high-end smart devices with state of the art software components. Whereas 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 search which directly affects sale of online advertising services by Google.”

Recommendations

• Licensing of Play Store (including Google Play Services) to OEMs shall not be linked with the requirement of pre-installing Google search services
• Cannot deny access to its Play Services APIs to disadvantage OEMs, app developers and its existing or potential competitors.
• Google shall not restrict uninstalling of its pre-installed apps by the users
• Google shall allow users during initial device setup to choose their default search engine