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Competition Commission of India fines google rs 1337.76 crore for anti-competitive practices

Competition Commission of India

competition commission of india

The primary national competition regulator in India is the Competition Commission of India (CCI). It is a statutory organization under the Ministry of Corporate Affairs and has the charge of upholding the Competition Act, of 2002, which was passed to encourage competition and halt actions that would significantly harm competition in India. If a matter hurts competition, the CCI checks into it and investigates.

To prevent two merging businesses from capturing too much of the market, CCI also allows combinations under the legislation. The commission was founded on October 14th, 2003. It hired Dhanendra Kumar as the company’s first chairman, and by May 2009, it was operating at full capacity. Ashok Kumar Gupta was chosen to serve in the position of CCI Chairman in 2018.

An Act to Establish a Commission to Prevent Unfair Competition Practices, Promote and Sustain Market Competition, Protect Consumer Interests, and Ensure Freedom of Trade by Other Attendees in Markets in India, and then for Matters Connected Thereto or Incidental Thereto, Keeping in Mind the Economic the Country’s Development.

Why was Google fined by the Competition Commission of India?

android apps by google llc on google play

The Indian watchdog began looking into Google three and a half years ago after receiving a complaint that claimed the company had used its market dominance to force OEMs to pre-install and prominently display the entire Google Mobile Suite, which includes Search, Chrome, YouTube, Maps, and Photos, among others.

For abusing its dominating position in several marketplaces with its mobile operating system (OS), the Competition Commission of India (CCI) fined Google Rs 1,337.76 crore and imposed a set of about a dozen important requirements on the business.

The regulator argued against requiring Android device manufacturers to pre-install Google apps on their products. Additionally, it urged Google to grant equal access to all interested parties. According to the CCI decision, “Google shall not limit access to its Google Services APIs to disadvantaged OEMs (mobile makers), app developers, and its current or prospective rivals.”

“This would guarantee app compatibility across Android OS that complies with Google’s and Android forks’ compatibility standards. This solution would make it simple for app developers to transfer their apps to Android forks. Modifications to the code are known as forks.

Following concerns from users of Android-based devices in the nation in April 2019, the committee commissioned a thorough investigation. The open-source mobile operating system deployed on smartphones and tablets by OEMs is called Android. The issue centers on the different contracts Google has with mobile device makers for the use of Android. Mobile carriers are constrained by these agreements’ terms and conditions, which force them to disregard Google’s competitors’ offerings.

According to Counterpoint Research, 97% of India’s 600 million cell phones run the Android operating system, making India Google’s largest market in terms of the user base.

The CCI determined that this requirement “amounts to imposition of unfair restrictions on the device producers” and was therefore “in breach of the Competition Act, 2002 provisions” According to the act’s requirements, “if an enterprise directly or indirectly imposes unfair or discriminating conditions in acquisition or sale of products or services, there shall be an abuse of dominant position under sub-section.”

apple - youtube

Google complained about Apple-related competitive pressures during the investigation. Apple’s business, according to CCI, is “mainly built on a vertically integrated connected device ecosystem that concentrates on the selling of high-end connected phones with cutting-edge software components, “As opposed to this, Google’s business is motivated by the ultimate purpose of expanding users on its platforms so that they engage with its revenue-generating service.

Google vs Apple Competition Commission of India’s Observation

The CCI made a significant finding regarding Google’s assertion that it wasn’t the market leader and that rival Apple posed a threat to its position. The CCI disagreed, claiming that Google Play, as well as the Apple App Store, as well as the Apple App Store just, weren’t interchangeable and that the two organizations employed various business strategies.

The CCI stated that although there may be some rivalry between the multiple mobile ecosystems, namely Apple and Android, “that too is also restricted at the time of selecting as to which handset to buy.” The commission held the considered opinion that the hardware is the first and most important aspect of the end user’s thinking at that time.

Google grants permission for the use of its proprietary software to makers of mobile phones. They enter into several agreements, including the Revenue Sharing Agreement, the Mobile Application Distribution Agreement (MADA), the Anti-Fragmentation Agreement (AFA), and the Android Compatibility Commitment Agreement (ACC) (RSA). According to CCI, Google assures through MADA that the most popular search entry points, such as the search app, widget, and Chrome browser, come pre-installed on portable devices, giving Google search services a competitive edge.

The same amount of market access that Google gained and established for itself via MADA was never available to the rivals of these services, according to the CCI. For Google’s rivals to enter or function in the relevant markets, “network effects combined with the status quo bias generate severe entry hurdles.”

However, since these agreements forbid mobile manufacturers from providing alternative services on Android-based handsets, they guarantee that distribution routes for competing for relevant searches are eliminated. The CCI noted that the RSA aids Google in securing exclusive exclusivity for its relevant searches to the detriment of rivals.

According to a press release from CCI, “The results strongly of these agreements assured continuous access to web searches of mobile users, which helped not just in protecting the advertising money but also to reap the benefits of the network externalities through continuous enhancement of services, to the isolation of competitors. With these agreements, the rivals rarely stood a chance of competing successfully with Google and, in the end, their arrangements resulted in shutting the market all of them as well as removing the options for customers”.

What Competition Commission of India want Google to do?

In addition to imposing a financial fine, the panel has ordered Google to stop engaging in the discovered anti-competitive activities. Additionally, it states that OEMs shouldn’t be required to preinstall and deploy just Google’s exclusive apps and services, as Google demands. Additionally, it is instructed to not prevent consumers from removing its pre-installed programs.

The business is to provide OEMs or other incentives to secure the monopoly for its search services. That the corporation “must not restrict access to its Play Services APIs that disadvantage OEMs, app developers, and its current or prospective rivals.” In the statement, CCI gave Google a deadline, it must change its behavior.

Google’s Response to the Competition Commission of India

According to a Google spokeswoman, the decision exposes Indians who rely on Android’s security features concerns. “Android  for everyone and helped thousands of flourishing companies in India and other countries. The CCI’s ruling is for Indian consumers and companies since it exposes those who rely on Android’s security measures threats and drives up the price for Indians. To determine the following measures, we will study the decision “explained the spokesperson.

Previous Instances of Google misusing its power: Report by CCI

During the 2 years CCI ordered in April 2019, the panel and Indian businesses, including Apple, Microsoft, Amazon, Payoneer, PhonePe, Mozilla, Lg, Xiaomi, Vivo, Oppo, and Karbonn. Google is the leader of the dominant and pervasive Android operating system (OS),  nearly the smartphone market.

 Google India had suppressed competition, the disadvantage of the market and customers to keep control over and supremacy in search, audio (through YouTube), browsers (Chrome), app stores (Play Store), and other important services. Google has been the subject of and is now the subject of antitrust investigations across the world, including the US, the European Union, Germany, and Japan.

After the CCI first received complaints accusing that Google India had impeded the access of competing mobile apps or services besides requiring tablet and smartphone manufacturers through specific  pre-install its proprietary apps and/or services, to look into several issues. The business combined its prized Google Services Through mobile (GMS) suite with  package, which featured the Play Store, search app, YouTube, and Chrome browser, based on its exclusive conditions.

A device manufacturer must sign a Mobile Application Distribution Agreement (MADA) and an AntiFragmentation Agreement (AFA)/Android Compatibility Commitment (ACC) with Google if they want, the important Google apps and go beyond the “bare Android version.” These agreements call for pre-loading Google apps and specific placements for them on the devices.

 

 

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