Operating rules

Changes in Android will have far-reaching consequences

Google is unbundling its Android operating system (OS) for smartphones to allow third-party app stores in Google Play Store after the National Company Law Appellate Tribunal and the Supreme Court refused to grant a stay on a Competition Commission of India order stating the tech giant had abused its dominant position. Google will also have to deposit the first instalment of the fine imposed. This matter has far-reaching consequences. Google’s Android OS has over 95 per cent of the market share in India, which consists of about 750 million smartphones. It can no longer impose a licensing agreement by which its own suite of proprietary mobile apps such as the Chrome browser, YouTube, Google Maps, and Gmail are pre-installed along with the Android OS by Indian mobile phone manufacturers. Google will also have to allow “side-loading” of competing apps from outside Play Store.

This ruling opens up key spaces for competing apps from other developers. They can pitch a wider range of apps as well as side-load and avoid paying commissions to Google. However, balanced against the promise of greater competition and the potentially improved services that could result from higher competition, it’s possible that handsets will become both more expensive and less secure. Different customised (or forked) versions of the Android OS exist and equipment manufacturers may use whichever variant they please, or develop their own forks. Developers may incur large costs to ensure that their apps stay compatible with these “forked” Android OSes. They will also have to set up data centres and secure servers to store user data. While Google can absorb such costs without blinking, other developers may have to charge users or manufacturers to cover these.

Further, one of the unique selling propositions of pre-installed Google apps, and the blocking of side-loads from outside Play Store, is that it does offer enhanced security to the user. Third-party apps listed in Play Store are said to be vetted for safety, and insecure or malicious apps are blocked. This is among the justifications for Google charging high commissions for transactions in the store. In addition, Google has highly secure servers to store user data from its own apps. It is possible a user who deploys alternative browsers, email accounts, and so on, will be less securely protected. This is a significant risk, given the volume of sensitive data stored on the average smartphone, and the massive number of daily m-commerce and m-banking transactions done using the Unified Payments Interface and credit or debit cards.

Despite those potential drawbacks, a more open system could, in the long run, benefit users. Google itself is more likely to innovate and create enhanced user-experience to maintain its market share in a competitive ecosystem. Other developers could find a niche where they offer better products. Android is open-source, which has led to a vast pool of developers tinkering and developing apps. Malicious apps get flagged fairly quickly. However, data security could be a lingering concern, given the lack of legal safeguards. The Indian smartphone ecosystem is likely to see a lot of churn as developers scramble for share in the newly opened spaces. In the meantime, Google, which has also been indicted in the EU, faces another antitrust investigation where it is accused of misusing its dominance in the online ad market in the US. This series of antitrust actions could change the contours of the smartphone market and possibly of digital advertising.