CCI Slaps INR 1,338 Cr Penalty On Google For Abuse Of Dominant Position

In a landmark ruling, the Competition Commission of India (CCI) has slapped a penalty of INR 1,337.76 Cr on tech giant Google for its anti-competitive practices.

The fine was imposed on the tech giant for abusing its dominant position in the Android devices market. The competition watchdog also issued a cease and desist order directing Google to modify its conduct within a defined timeline.

“The Competition Commission of India (Commission) has imposed a penalty of INR 1,337.76 Cr on Google for abusing its dominant position in multiple markets in the Android mobile device ecosystem, apart from issuing cease and desist orders. The Commission also directed Google to modify its conduct within a defined timeline,” the CCI said in a statement.

In its report, the CCI found Google guilty of a range of anti-competitive practices with regards to its search, app-store, video streaming and browser offerings. The report concluded that:

• Mandatory pre-installation of the entire Google Mobile Suite amounted to imposition of unfair conditions on the device manufacturers and thereby was in contravention of the Competition Act
• Google perpetuated its dominant position in the online search market resulting in denial of market access for competing search apps
• Google leveraged its dominant position in the app store market for Android operating system (OS) to protect its position in online general search in contravention of the Act
• Google leveraged its dominant position in the app store market for Android OS to enter as well as protect its position in non-OS specific web browser market through Google Chrome App 
• Google, by making pre-installation of Google’s proprietary apps (particularly Google Play Store) conditional for all device manufacturers, reduced the ability and incentive of OEMs to develop devices operating on alternative versions of Android and limited the technical or scientific development to the prejudice of the consumers

The CCI also noted ‘glaring inconsistencies’ in various revenue data points submitted by Google. It directed the tech giant to submit requisite financial details and supporting documents in the matter in 30 days. 

Inc42 has reached out to Google for a comment on the order. The story will be updated on receiving a response from the company.

CCI’s Findings 

The CCI clearly underlined that Google enjoyed a dominant position in all the relevant markets that were being probed. These included the markets for licensable OS for smart mobile devices, app marketplaces, general web search, non-OS specific mobile web browsers and online streaming.

Specifically pointing out Google’s edge in the search and online video hosting markets, the CCI said that biases embedded on the platform favoured the tech giant and created significant entry barriers for its competitors. 

The competition watchdog also noted that Google purposely ‘eliminated’ channels for competing search engines by prohibiting OEMs from offering devices based on Android forks. In the absence of these mandates, developers could have easily developed a different version of Android and replaced the in-built Google search engine with other services.

Essentially, fork refers to a process in which a developer uses a copy of the source code of a program and creates a new standalone project out of it. 

It also said that Android fork developers were also left in the lurch as they could not find distribution channels for their fork operating systems as almost all the OEMs were tied with Google. The CCI also pointed out that the revenue sharing agreements signed by different stakeholders with Google enabled the tech giant to ‘secure exclusivity for its search services to the total exclusion of competitors’.

“With these agreements in place, the competitors never stood a chance to compete effectively with Google and ultimately these agreements resulted in foreclosing the market for them as well as eliminating choice for users,” added a statement from CCI.

Clamping Down On Google

Lashing out at Google, the watchdog directed it to not force OEMs to pre-install its proprietary applications or decide their placement. It also warned Google against linking licensing of Play Store to OEMs with the requirement of pre-installing Google search services and other apps. 

Besides, Google was specifically told to not deny access to its Play Services APIs and also warned against offering any incentives, monetary or otherwise, to OEMs for entering into exclusivity contracts 

The CCI also barred the US-based company from restricting uninstallation of pre-installed apps by users on their phones. 

In one of the biggest takeaways for the developer community, the CCI directed Google to not restrict distribution of apps through side-loading. 

Side-loading refers to directly installing Android apps via an APK, rather than going to the Play Store. While side-loading comes with its own set of security challenges, the near total monopoly of Google in the app marketplace segment hands the tech giant overwhelming power. 

“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,” added the competition watchdog. 

This is not the first time that Google is in the dock for its alleged abuse of dominance. Earlier, Google faced the ire of the CCI for its anti-competitive practices in the operating system market, news aggregation space, digital payments market and for its in-app billing policy on the Play Store.

India is Google’s largest market by users, accounting for a near total monopoly in the OS market. The tech giant also enjoys one of the biggest user bases across other sister platforms, including YouTube, Google search, Gmail and Drive. 

The INR 1,337 Cr ($161 Mn) fine stands in contrast to the mammoth $4.4 Bn penalty imposed by the European Union earlier last month on the tech giant for allegedly using its market dominance in the smartphone market to promote other Google products.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.