Tech-tonic shift: Google reworking terms of mobile app distribution

Sources say that Google will place the new licence agreement before the CCI for its endorsement

With the Supreme Court (SC) rejecting Google’s appeal for a stay on the huge fine slapped on the tech giant by the Competition Commission of India (CCI), the US company is reworking its terms of the Mobile App Distribution Agreement (MADA), which it has signed with mobile device brands.

This will be necessary so as to incorporate changes in Google’s app policy, as ordered by the CCI. The Supreme Court has rejected Google’s appeal for an interim stay on the National Company Law Appellate Tribunal order upholding the Rs 1,337.76 crore penalty imposed on it by the CCI for anti-competitive practices. The apex court has given Google a week to comply with its directions.  

Sources say that Google will place the new license agreement before the CCI for its endorsement before it is sent to the mobile device OEMs.

A senior executive of a mobile device company says, “We cannot make any changes in the licensing agreement with Google or we will risk cancellation. Under this agreement, the licensing of Google Play Store requires us to pre-install 5-7 Google apps, which include Google search, Gmail, Youtube, Google Maps, and Duo, amongst others. The placement of these apps are also decided under the licence. However, the SC order, combined with the CCI’s directions, will completely change the rules.”

The executive also points out that the CCI has clearly stated in its order that various anti-competitive clauses of agreements like MADA shall not be enforced by Google with original equipment manufacturers (OEMs) in India.

Mobile device makers say that based on the CCI order, they will not be forced to pre-install a bouquet of Play Store applications, nor follow the rules on their placements. Moreover, Google now has to give customers the choice to un-install Google apps. With Google on the implementation of the CCI order.

However, a Google spokesperson did not respond to queries.

Also, while third-party apps will now be allowed on the Play Store platform, or sideloaded (without clearance from Google), mobile device brands say that this will pose several challenges. 

Says a senior executive of a well-known mobile device brand, “On sideloading of apps, there are numerous security issues which need to be resolved. While Google wants the responsibility to be pushed on us, we have nothing to do with it, as our relationship with a consumer ends with the selling of the phone, after which, it is limited to fulfilling warranty requirements. Why should we invest in the security and upgrades of apps?”   

A home-grown mobile device maker points out that while it has been distributing Google’s apps for free and building their customer base, it has not been paid for doing so, because of Google’s huge monopoly of the market.

Sources close to Google argue, however, that the company has made huge investments in the operating system, which is available to mobile device makers for free, provided they pre-install some of its apps on their handsets. 

 This ensures that mobile phone prices are affordable, that Google makes money from advertising on the apps, and that telcos get revenue through data usage. In fact, 97 per cent of app developers do not pay Google for being on their app store.

However, with the CCI’s order against Google being upheld, this model is clearly on its way out.