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The Competition Commission of India (CCI) said in October that Google had exploited its dominant position in the market and as a result had imposed two fines and antitrust directives for the tech giant to follow in India.
The Android mobile operating system powers 97 per cent of 600 million smartphones in India. In the latest development of this ongoing case, Google has now, reportedly, asked the Supreme Court (SC) to quash antitrust directives against it for abuse of the Android market.
According to sources, the company claims that it did not abuse its dominant position, inasmuch should not be required to pay the penalty.
The CCI has also asked the SC to provide partial relief according to media reports.
Background of the case
In October 2022 the CCI had slapped two fines on the tech giant, Google. This order is regarding the first monetary penalty of Rs 1337.76 crore that was imposed for anti-competitive practices relative to Android mobile devices. In the order, Google was accused of abusing its dominant position in multiple markets.
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The fair trade regulator also ordered the tech giant to cease and desist from many of their unfair business practices.
In response, Google filed a petition challenging the CCI order, stating that the verdict was a “setback” for the Indian users and would make devices more expensive in the country as a result, it also sought an interim stay over the penalty.
This was brought before the SC in January, which upheld the remedies suggested by the CCI. The National Company Law Appellate Tribunal (NCLAT) also directed Google to deposit 10 per cent of the total monetary penalty and also abide by the non-monetary sanctions imposed by the CCI.
"We are of the opinion that at the moment given the voluminous nature of the appeal, there is no need to pass any interim order," the panel said.
The SC, however, did ask the NCLAT to hear Google’s case and rule by the end of March.
On January 25, Google announced through its blog that it intended to comply with India’s directives.
“We take our commitment to comply with local laws and regulations in India seriously. The CCI’s recent directives for Android and Play require us to make significant changes for India, and today we’ve informed the CCI of how we will be complying with their directives,” the post read.
On March 29, the NCLAT upheld the monetary penalty by CCI in a two-member bench. NCLAT further directed Google to implement the directions provided by CCI and deposit the penalty amount in 30 days.
The two-member bench comprised NCLAT chairperson Justice Ashok Bhushan and member Alok Shrivastav.
Grounds on which Google violated India’s competition law
The Android operating system (OS) is essential for running applications on smartphones. One of the most popular OSs is Android, which was acquired by Google in 2005. Google manages the Android OS and licences its proprietary apps like Chrome and Play Store to smartphone manufacturers.
Manufacturers must enter agreements with Google to use these apps on their devices. These agreements, such as the Mobile Application Distribution Agreement (MADA) and Anti-fragmentation Agreement (AFA), govern their rights and obligations.
The CCI stated that Google used these agreements to ensure that manufacturers using Google's apps had to use its version of Android. This restricted the distribution channels for alternative operating systems, as most original equipment manufacturers (OEMs) were tied with Google. The MADA restrictions also mandated the pre-installation of Google apps such as the search app, widget, Chrome browser, etc on Android devices that could not be uninstalled.
Furthermore, Google dominates the app store market for Android OS worldwide with Google Play Store accounting for around 95 per cent of India’s market share, according to a report by the Economics Times in October 2022.
The CCI discovered that due to the mandatory pre-installation of the Google Suite, consumers lacked the option to download apps outside of the Play Store. The CCI examined the competition between Apple's App Store and the Google Play Store but concluded that the two were not substitutable.
Moreover, through revenue sharing agreements (RSAs) with mobile manufacturers, Google ensured exclusivity for its search services, excluding competitors. These agreements guaranteed continuous access to mobile users' search queries, protecting Google's ad revenue and providing network effects. Google's default search browser on Android smartphones further solidified its dominance.
As a result of these agreements, Google's revenue-earning app, YouTube, gained a significant advantage over competitors in the online video hosting platforms market, according to the CCI.
Directives given to Google by CCI
Smartphone manufacturers should have the freedom to choose which of Google's apps they want to install on their devices and not be compelled to pre-install the entire suite of Google's proprietary apps.
The licensing of the Play Store to manufacturers should not be tied to requirements for pre-installing Google’s apps.
During the initial setup of a device, users should have the option to choose their default search engine for all search entry points and other related features.
Google should not deny access to its Play Services APIs, which enable programs to interact with each other, in a way that disadvantages manufacturers, app developers, or potential competitors.
Google should not offer any form of incentives, such as revenue-sharing agreements, to smartphone manufacturers in exchange for exclusive use of its search services.
Google should not impose anti-fragmentation obligations on manufacturers, meaning that those using alternative versions of Android should be able to access Google's proprietary apps, and vice versa.
Users should have the freedom to uninstall pre-installed Google apps from their devices without any restrictions.
