The CCI’s 1,300 crores fine against Google and how it will affect Android smartphones?

How is the Alphabet-owned company allegedly infringing on its position, particularly in relation to the Android mobile device ecosystem? Is this India’s first investigation into Google? The CCI’s 1,300 crores fine against Google and how it will affect Android smartphones?

So far, the current Competition Commission of India (CCI) has fined Alphabet-owned Google a preliminary fine of Rs. 1,337.76 crores for “abusing its dominant-position” in markets related to the Android mobile device ecosystem.

How did Google violate Indian competition law?

While the Android source code is publicly available and covers the fundamental functions of a smartphone, it does not include Google’s proprietary applications. Manufacturers must enter into agreements with Google that govern their rights and obligations in order to access and use these applications in their mobile handsets, such as the Mobile Application Distribution Agreement (MADA), Anti-fragmentation Agreement (AFA), and so on, in order to access and use these applications in their mobile handsets. Android Compatibility Agreement (ACC), Revenue Sharing Agreement (RSA), and so on.

According to the CCI, Google used these restrictions in agreements to ensure that manufacturers who wanted to use Google’s proprietary apps had to use Google’s version of Android. As a result, Android fork developers were unable to find distribution channels for their forks or alternate OSs because almost all OEMs were tied to Google. More importantly, MADA restrictions ensured that the most prominent search entry points, namely the search app, widget, and Chrome browser, as well as the entire Google Mobile Suite (GMS), came pre-installed on Android devices with no option to uninstall them.

Second, Google is the dominant player in the global app store market for Android OS (except China). According to the new EU, more than 90% of apps downloaded on Android devices worldwide are from the Google Play Store. Because of the mandatory pre-installation of the Google Suite, consumers, according to the CCI, did not have the option of side-loading or downloading apps outside of the Play Store (which includes the Play Store). 

Google claimed during the CCI investigation, as it did during the EU investigation, that it faced competitive constraints from Apple in the app store domain. As a result, the CCI investigated whether Apple’s App Store and Google Play Store were interchangeable. It was determined that Apple’s App Store could not replace the Play Store because Apple is primarily based on a current vertically integrated smart device ecosystem that also focuses on the sale of high-end smart devices. 

The CCI also stated that while there may be some competition between the two mobile ecosystems, namely, Android and Apple, it is limited to the time spent deciding which device to purchase.

The CCI determined that Google was dominant in all of the aforementioned relevant markets and that its practices violated multiple subsections of Section 4 of the Competition Act. The Commission stated about Google’s multiple restrictive agreements with Android smartphone manufacturers: “With these agreements in place, all competitors never stood a chance to compete effectively with the Google, and ultimately these agreements have diffferently resulted in the foreclosing the market for them as well as then eliminating choice for users.”

What has the CCI requested that Google change in the Android smartphone ecosystem?

Aside from the “cease and desist” order issued against Google for anti-competitive practices, also the CCI has directed it to take certain steps regarding the Android OS ecosystem. Among the major directions are:

• Smartphone manufacturers should be able to choose which of Google’s proprietary apps to install and also should not be forced to install the entire bouquet.
• Manufacturers should not be required to pre-install Google search services, then Chrome browser, YouTube, Google Maps, then Gmail, or any other Google apps in order to use the Play Store.
• During device setup, Google should allow users to select their default search engine for all search entry points.
• Google shall not deny manufacturers, app developers, or existing or potential competitors access to its Play Services APIs (which allow two programs to interact with each other). According to the Commission, this would ensure app interoperability between Google Android OS and alternate versions or forks of Android, and app developers would be able to easily port their apps onto Android forks as a result of this remedy.
• Google should not provide OEMs with monetary or other incentives, such as those provided in revenue-sharing agreements, in order to ensure exclusivity for its search services.
• Google will not impose anti-fragmentation obligations on OEMs, which means that manufacturers who use a different version of Android should be able to access Google’s proprietary apps and vice versa.
• Users’ ability to uninstall Google’s pre-installed apps is not restricted.
• The CCI also found “glaring inconsistencies” in Google’s revenue data and gave it 30 days to provide the necessary financial details and supporting documents. It also stated that the penalty for exceeding $1,300 was provisional, meaning it could be increased.

What are the other antitrust cases filed against Google in India and around the world?

Google is already the subject of two CCI antitrust investigations. The Commission ordered an investigation into allegations that Google abused its dominant position in India’s smart television market with Android in June 2021. According to the CCI, certain agreements between Google and smart TV manufacturers amounted to Google abusing its dominant position.

In November 2020, the CCI opened an investigation into allegations also that Google abused its also dominant position to push its payment system. CCI launched the investigation in response to app developers’ mandatory use of the Google billing system to charge their users for app purchases on the Play Store and/or In-App purchases. This year, the CCI concluded its hearing and reserved its decision in the investigation. 

Google decided to pilot a third-party billing system on its play store in order to soften the blow from the regulator. Google was investigated three times in the United States and the European Union for antitrust violations in search and search-related activities, as well as advertising sales markets. As a result of the EU lawsuits, Google has received fines totaling approximately $8 billion.

According to a report by India’s Competition Commission, Google abused its Android dominance.

According to a report on its two-year investigation obtained by Reuters, Google abused its dominant position in India with its Android operating system, using its “huge financial muscle” to illegally harm competitors.

According to a June report by the Competition Commission of India’s (CCI) investigations unit, Alphabet Inc’s Google reduced “the ability and incentive of device manufacturers to develop and sell the devices operating on alternative versions of Android.”

Google said in a statement that it is looking forward to working with the CCI to “demonstrate how Android has ultimately led to more into competition and innovation, not less.”

According to Reuters, Google has not received the investigation report.

The CCI did not respond to a valid request for comments on the report. According to another person familiar with the case, senior CCI members will review the report and give Google another chance to defend itself before issuing the final order, which could include penalties.

Google could challenge any order in Indian courts.

Its findings are Google’s latest antitrust setback in India, where it is facing several investigations in the payments app markets. The company has been investigated in Europe,then the United States, and other countries. Google was fined $180 million by South Korea’s antitrust regulator this week for blocking customized versions of Android.

‘VARIOUS, BIASED, AND ARBITRARY’

According to the report, Google submitted at least 24 responses during the investigation, defending itself and claiming it was not harming competition.

According to the report, Microsoft Corp, Amazon.com Inc, Apple Inc, and smartphone manufacturers such as Samsung and Xiaomi were among the 62 entities that responded to CCI-questions during its Google investigation.

According to Counterpoint Research, Android powers 98% of India’s 520 million smartphones.

When the CCI launched the investigation in 2019, it stated that Google appeared to have used its dominance to limit device manufacturers’ ability to choose alternate versions of its mobile operating system and force them to pre-install Google apps.

According to the 750-page report, mandatory app pre-installation “amounts to imposition of unfair conditions on the device manufacturers” in violation of Indian competition law, while the company used the position of its Play Store app store to protect its dominance.

According to the report, the Play Store policies were “one-sided, ambiguous, vague, biased, and arbitrary,” while Android has “enjoyed its dominant position” in licensable operating systems for various smartphones and tablets since 2011.

According to Reuters, the investigation was launched in 2019 after a complaint was filed by two Indian junior antitrust research associates and a law student.

Google sees India as a key growth market. It announced last year that it would invest $10 billion in the country over the next five to seven-years through equity investments and joint ventures, its largest commitment to a key growth market.

Google defends Android phone maker deals and rejects carrot-and-stick tactics

Alphabet unit Google said on Tuesday that deals with Android phone makers that resulted in a record 4.3 billion euro ($5 billion) antitrust fine boosted competition and rejected EU charges that they were a carrot-and-stick strategy that stifled rivals.

Google spoke on the second day of a week-long hearing in which it is attempting to have Europe’s second-highest court overturn the fine and a European Commission order requiring it to loosen its search engine grip on Android devices.

Google’s lawyers and the EU competition commissioner clashed over the company’s Mobile Application Distribution Agreements (MADAs), which require phone makers (OEMs) to pre-install the Google Search app and Chrome browser app in exchange for free Google Play licensing.

“This licensing model is what drew OEMs to the Android platform and allowed those OEMs to provide a consistent and high-quality user experience at the lowest possible price,” Google’s lawyer Alfonso Lamadrid told the General Court.

“People use Google because they want to, not because they have to,” he explained.

The Commission’s lawyer, Carlos Urraca Caviedes, dismissed the argument, referring to the deals and other restrictions as Google’s carrot-and-stick policy toward phone makers.

“These aided Google in ensuring that its competitors did not achieve critical mass to challenge its dominance,” he told the court.

He also claimed that such transactions were unnecessary given Google’s market power and large user base. According to Urraca Caviedes, Google’s actions “exceed what is required to develop and maintain the Android platform.”

The EU Court of Justice upholds a $4 billion Google Android antitrust fine

A high court rejected Google’s appeal of a record European Union antitrust fine imposed for stifling competition and reducing consumer choice through its mobile Android operating system dominance. It is yet another victory for EU regulators, who are taking the global lead in limiting the power of large tech companies.

The European Court of Justice’s General Court mostly upheld a 2018 decision by the EU’s executive Commission to fine Google more than 4 billion euros ($3.99 billion).

According to the court, a fine of 4.125 billion euros is appropriate “to better reflect the gravity and duration of the infringement.” Because the court’s reasoning differed “in certain respects” from the commission’s, the penalty is slightly lower than the original 4.34 billion euro penalty.

“We are disappointed that the Court did not completely overturn the decision,” Google said in a statement. “Android has created more choice for everyone, not less, and supports thousands of successful businesses in Europe and around the world,” the company previously argued. Android has surpassed Apple’s iOS as the most popular mobile operating system.

The fine is one of three antitrust fines totaling more than $8 billion imposed on Google by the European Commission between 2017 and 2019, putting the 27-nation bloc at the forefront of the global push to rein in tech behemoths.

Since then, the commission has increased its crackdown on digital behemoths, launching new antitrust investigations against Amazon, Apple, and Facebook, as well as enacting broad new rules aimed at stifling the largest digital firms. Google was fined $50 million on Wednesday by South Korean privacy watchdogs, who also fined Facebook parent Meta $22 million.

The European Commission stated in its initial decision that Google’s practices restrict competition and reduce consumer choices.

It found that Google violated EU rules by requiring smartphone manufacturers to take a bundle of Google apps if they wanted any at all and prohibiting them from selling devices running modified versions of Android.

The bundle included 11 apps, including YouTube, Maps, and Gmail, but regulators focused on the three with the highest market share: Google Search, Chrome, and the company’s app store, Play Store.

Following the original ruling, Google made some changes to address the issues, such as giving European Android users a choice of browser and search app and charging device makers to pre-install its apps.

The EU consumer group BEUC, which argued in court for the commission’s case, said the decision “confirms that Europe’s consumers must enjoy meaningful choice between search engines and browsers on their phones and tablets.” Google has one more chance to appeal the decision — but only on legal grounds — to the EU Court of Justice, the bloc’s highest court.

The company has already lost an appeal of its first EU antitrust penalty, which it is now appealing to the Court of Justice; last year, the General Court sided with the commission, upholding a 2.4 billion-euro fine issued in 2017 by regulators who decided that Google unfairly directed visitors to its comparison shopping service, Google Shopping, to the detriment of competitors.

The three most recent antitrust cases filed against Google

Google’s legal woes are getting worse by the day, with the search giant being hit with three antitrust cases by the US Department of Justice (DoJ) and more than a dozen states.

The lawsuits filed against the Silicon Valley behemoth allege antitrust violations, with each focusing on a different aspect of the wrongdoing: two focus on Google’s monopoly in search and search-related activities, while the third accuses the company of anti-competitive practices related to its advertising technology.

What are the three scenarios?

The Department of Justice filed the first case in October, one of the largest lawsuits against a technology company in nearly two decades, accusing Google of maintaining a monopoly over search activities by striking exclusive contracts with other companies to set Google as the default search engine on browsers and smartphones.

According to the Justice Department’s complaint, Google paid Apple $12 billion per year to make Google the default browser on Safari, and Google’s 80% market share in search engine business was made possible by such deals with Apple and other smartphone makers.

Google claimed that its billions of dollars spent helped it gain the top spot in search of millions of devices, edging out competitors and maintaining a monopoly.

The third case, filed by a group of 38 US states and territories led by the Attorney Generals of Colorado and Nebraska, accuses Google of illegally retaining ‘untrammeled’ power in general search services and search advertising.

It claims that Google used three types of anti-competitive policies to maintain its monopoly in the search-related business. The first argument is similar to the DOJ’s claim that Google paid Apple and other smartphone makers to ensure Google is enthroned as the default search engine, preventing rivals from gaining access to key distribution channels.

Google pursued similar strategies with other devices, such as voice assistants and internet-connected cars, it added.

According to the new claim, Google’s Search Ads service “severely limits” the tool’s interoperability with a competitor, which disadvantages advertisers.

It also stated that Google prevents consumers from bypassing its general search engine, which means that it excludes specific sites and services from its search results.

According to the complaint, Google discriminates against services provided by specialized vertical providers such as travel agencies that offer the ability to complete a transaction immediately, because the search giant prefers that all consumers begin their search with Google rather than going directly to the site or an app.

They pose a threat to Google’s monopoly power in those markets because their success would strengthen general search rivals with whom they collaborate while also lowering the artificially high barriers to expansion and entry that protect Google’s monopolies.

As a result, Google undermines competitive threats by limiting consumers’ and advertisers’ ability to obtain information and make their own decisions; additionally, Google’s actions have blocked and burdened current and emerging general search technology.

A day before a coalition of more than 30 US states and territories filed a case, a group of ten states led by Texas filed their own lawsuit alleging Google engaged in illegal monopoly suppression by rigging ad auctions with Facebook.

According to the complaint, when Google saw Facebook emerging as a competitor in online advertising, it reached an agreement with the social media giant in which Facebook agreed to reduce its moves in the advertising space in exchange for preferential treatment during Google ad auctions.

Google, which controls one-third of the global advertising market, has been accused of abusing its monopoly by allowing its own exchange to win ad auctions despite higher bids from competitors and overcharging publishers for ads.

According to the complaint, the search giant conspired with Facebook, its most significant competitive potential threat, to eliminate competition through illegal agreements.

The states have asked Google to compensate them for their losses and have requested structural relief.

Google’s Reaction

In a blog post shortly after the DOJ lawsuit was filed, Kent Walker, Senior Vice President for Global Affairs and Chief Legal Officer at Google, called it “deeply flawed,” claiming that there is nothing wrong with paying phone manufacturers to grab “eye-level shelf” space, and that competitors are readily available for use as well.

He also claimed that Google’s agreement with Apple and other device makers is similar to agreements used by many companies to distribute software.

“Other search engines compete with us for these agreements, including Microsoft’s Bing, and our agreements have passed repeated antitrust reviews,” Walker said.

People use Google because they want to, not because they have to, he added.

In another response to the lawsuits filed last week, Adam Cohen, Google’s Director of Economic Policy, reiterated Walker’s statement, saying that if people don’t like the results Google is providing them with, there are many other options available, such as Amazon, Expedia, and Tripadvisor, just a click away.

Cohen claims that the lawsuit calls for changes to the design of Google Search, which would result in the involvement of online middlemen rather than direct connections to businesses, lowering the quality of search results.

This, in turn, would harm businesses such as retailers, restaurants, repair shops, airlines, and hotels, making it more difficult for them to reach new customers and compete against large commerce and travel platforms, as well as other aggregators and middlemen, he added.

According to Cohen, the volume of traffic Google sends to non-Google sites has increased year after year, and its search results page now displays an average of 26 outgoing links on mobile devices, up from 10.

He also stated that Google is prepared to answer all questions and work through the issues, and that the company intends to argue that the lawsuit seeks to redesign Search.

This would deprive Americans of useful information while also harming businesses’ ability to connect directly with customers. The cases can take years to resolve, and US District Judge Amit Mehta dropped the first hint when he set September 12, 2023, as a tentative date to begin the trial of the Justice Department antitrust lawsuit.