Is Google ‘Abusing’ Its Dominant Market Position? Here’s Why CCI Fined It Twice In A Week

Google is known for its monopoly in the Android ecosystem but its dominance has often led to tight scrutiny from regulators around the world. The latest is the Competition Commission of India (CCI) which has fined the tech giant twice in about a week.

Google has been facing regulatory troubles, especially in Europe, but now it has come under the scanner of CCI which ordered the company to pay Rs 1,338 crore for following anti-competitive practices in relation to Android mobile devices.

Just a week later, CCI slapped a fresh Rs 936 crore penalty on the US tech giant for abusing monopoly through its app aggregator Play Store. 

Google is facing a series of antitrust cases in India. The CCI is also looking into its business conduct in the smart TV market and its in-app payments system.

The tech giant was earlier fined by CCI in 2018 when it faced a penalty of Rs 136 crore for unfair business practices in the Indian market for the online search.

What CCI Said In Its Orders

In its latest order, CCI asked Google to "cease and desist" from practicing policies that give it powers to abuse its dominant position in running Play Store.

"... practices followed by Google result in leveraging its dominance in market for licensable mobile OS (operating system) and app stores for Android OS, to protect its position in the downstream markets," CCI said.

CCI said Play Store policies require app developers to "mandatorily" use Google Play's Billing System (GPBS) even for certain in-app purchases. 

The app developers are not permitted to list their apps on the Play Store if they don’t comply with Google's policy of using GPBS.

The CCI also said Google should not deny access to its Play Services plugins to “disadvantaged” original equipment manufacturers (OEMs), and the licencing of Play Store to OEMs should not be linked to the requirement of pre-installing Google search, Chrome browser, YouTube, Google Maps, Gmail or any other Google application.

The CCI also said that Google will have to allow users to choose their default search engine during the initial device setup. 

It asked Google not to restrict the ability of app developers to distribute their apps outside of Google’s Play Store. 

Is Google Violating The Competition Law In India?

In 2019, the CCI ordered a probe against Google following complaints by users of Android-based smartphones. 

Google manages the Android operating system as well as other licences, which gives it advantage over its competitors to pre-install apps, widget and Chrome browser on Android devices.

“The competitors of these services could never avail the same level of market access which Google secured and embedded for itself through MADA (Mobile Application Distribution Agreement) Network effects, coupled with status quo bias, creating significant entry barriers for competitors of Google to enter or operate in the concerned markets,” CCI said in its order.

Android is one of the most popular operating systems for smartphones and to use Google’s proprietary applications, phone manufacturers have to enter into agreements with Google that govern their rights and obligations such as MADA, Anti-fragmentation Agreement (AFA), etc. 

The CCI said through these restrictions in agreements, Google ensured manufacturers had to use its version of Android. 

Through MADA restrictions, it assured that the most prominent search entry points i.e., search app, widget and Chrome browser, and the whole Google Mobile Suite (GMS) came mandatorily pre-installed on Android devices with no option to uninstall it.

The CCI held that through the mandatory pre-installation of the Google Suite (which includes Play Store), consumers did not have the option of side-loading or downloading apps outside of the play store. 

By having Revenue Sharing Agreements (RSAs) with mobile manufacturers, Google was able to “secure exclusivity” for its search services to the “total exclusion of competitors”. 

The CCI said these agreements with OEMs guaranteed Google continuous access to search queries of mobile users, helping not only in protecting its advertisement revenue but also in reaping the network effects through “continuous improvement of services, to the exclusion of competitors”.

The regulator also said due to Google’s various agreements with manufacturers, Youtube gained a significant edge over competitors in the online video hosting platforms market. 

“With these agreements in place, 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,” the CCI said.

Antitrust Cases Against Google In Other Countries

Besides India, Google has been under the scanner of competition watchdogs in UK, US, European Union, and a few other places.

Google faced three probes in the US and the European Union (EU) regarding its antitrust practices in search and search-related activities as well as advertising sales markets. In EU, Google faces nearly $8 billion fine.

Indonesia’s competition commission (KPPU) announced an investigation into Google and its use of proprietary payment services for the Play Store. 

The regulator accused the company of abusing “its dominant position, conditional sales and discriminatory practices in digital application distribution in Indonesia.”

In June, Google got a third antitrust probe from UK's competition watchdog, adding scrutiny of its app store payments to earlier investigations into advertising rules for in-app billing.

In 2017, the European Commission fined Google 2.42 billion euros for breaching the European Union’s antitrust rules. The European Court of Justice’s General Court this year confirmed a 2018 decision by the EU’s executive commission to slap Google with a fine of more than 4 billion euros.

What Google Said After Being Fined By CCI 

After the first CCI fine, Google said the CCI’s decision was "a major setback for Indian consumers and businesses" and that it would review the decision to evaluate the next steps.

"Android has created more choices for everyone and supports thousands of successful businesses in India and around the world. The CCI's decision is a major setback for Indian consumers and businesses, opening serious security risks for Indians who trust Android's security features and raising the cost of mobile devices for Indians. We will review the decision to evaluate the next steps," a Google spokesperson had said.

After the second fine, Google on Wednesday said it was committed to its users and developers and that the firm's model had "powered India's digital transformation and expanded access for hundreds of millions of Indians.

A Google spokesperson on Wednesday said: "we remain committed to our users and developers and are reviewing the decision to evaluate the next steps,"

"Indian developers have benefited from tech, security, consumer protections & unrivalled choice and flexibility that Android & Google Play provide. By keeping costs low, our model powered India's digital transformation and expanded access for hundreds of millions of Indians,” he added.