(Representative Image: AP)
Big Tech companies have been targeted by antitrust watchdogs across the world in recent years, but found India to be a relatively safe habitat at least on the competition regulation front.
That changed on Thursday, October 20, when the Competition Commission of India (CCI) slapped a penalty of Rs 1,338 crore ($162 million) on Google for abusing its dominance in the Android ecosystem.
Of course, it’s not a huge sum for a company valued at over $1 trillion, which earned 10 times the penalty in revenue from the Indian market in FY22.
But the devil, at least for Google, is in the details of the CCI's directions.
In a set of diktats, India's antitrust watchdog has prised open Google's playbook of preserving Android’s 96 percent market share in India's 600-million strong smartphone market.
It has asked the company to steer clear of anti-competitive agreements with device makers, allow users the choice to not use its search and allied services on Android, make way for developers to build competitive products, and more.
In this article, we make an effort to give a glimpse of all that happened in the lead up to the CCI order and what’s next for stakeholders in the Android ecosystem.
The CCI’s investigation into Google’s alleged abuse of dominant position dates back to 2019 following a complaint by two antitrust research associates and a law school student.
In it, the commission had alleged that Google had abused its dominant position in India and had reduced the ability of device manufacturers to opt for alternative versions of its Android mobile operating system.
On September 23, the same year, Google took CCI to court, alleging leak of a confidential interim report related to the ongoing investigation.
A year later, CCI initiated another investigation of Google, this time relating to its payment system on Play Store.
In 2021, the commission ordered another investigation of allegations that Google was abusing its dominance in the Android operating system in India’s smart television market.
In its order, CCI said its initial view was that Google is dominant in the market of licensable smart TV device operating systems in India and based on the information available, it is "convinced that a case is made out for directing an investigation."
In October this year, CCI announced its latest investigation of Google, relating to alleged unfair revenue-sharing terms with respect to news content.
Rakesh Deshmukh, co-founder of home-grown application and content discovery platform Indus OS, which is now owned by PhonePe, over the years has had to bear the brunt of these alleged anti-competitive practices by Google.
“From our decade-long experience, we realised that if there has to be safe competition with Google services, alterations need to be made both at the OEM (original equipment manufacturer) and secondary Android levels. We will continue fighting this battle,” he added.
Freeing up the fork ecosystem
Much like other open source software, Android can also be forked by other developers to provide users and handset manufacturers alternative operating systems.
While Google kept the basic version of Android open-source after its acquisition of the company and allowed such forks in theory, industry insiders allege that the tech giant virtually kept its control on the ecosystem through a string of moves.
The CCI order agreed with such claims. It said that Google had struck deals with device manufacturers to pre-install its own version of Android to maintain its dominant position in the market.
Further, it restricted features like app notifications and location services from being accessed by forks. This meant that even if a developer built a competing version of Android, they could not access key parts of the software to build their products.
Now, the antitrust watchdog’s order has said that Google cannot deny access to such key software bridges to disadvantage OEMs, app developers and its existing or potential competitors.
This would ensure interoperability of apps between Android OS which complies with compatibility requirements of Google and Android Forks. By virtue of this move, app developers would be able to port their apps easily onto Android forks.
Apart from freeing the Android fork ecosystem, India’s antitrust body also wants Google to stop restricting the ability of app developers, in any manner, to distribute their apps through side-loading.
In the Android world, side-loading typically means the ability to download an app in an APK file format from a web source. This is done for apps that are not available on Google’s own app store – either because the company’s policies don’t allow certain kinds of apps on its store (such as real-money gaming apps, until recently) or because a developer does not want to list them on the store for reasons like high commissions or strict technical requirements.
At present, whenever a user tries to side-load an app via Google Chrome, the company’s web search engine, it shows an alert saying the file may harm the user’s computer. This scares off users from side-loading.
“With this order, access to distribute our app has been unlocked. However, Google has not yet created a level playing field for players such as ourselves, as it flags all third-party apps, warning users of ‘external or untrusted sources’ whenever they install such apps,” said Rakesh Deshmukh, co-founder of Indus OS.
This decision dwells on the conflicting interests of consumers, mobile manufacturers and competitors of Google itself,” ex-CCI chief Vinod Dhall told Moneycontrol.
In the October 20 order, the commission has directed Google to allow 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," it said.
In terms of impact on OEMs, CCI said Google cannot force OEMS of smart devices to pre-install its own apps and restrict users from uninstalling such apps.
These apps include Chrome browser, YouTube, Google Maps, Gmail or any other application of Google. The company will not be able to offer any incentives to OEMS to ensure exclusivity of its search devices.
Apart from that, Google will not be able to deny access to its Play Services APIs to disadvantage OEMs, app developers or potential competitors, a statement by CCI said.
The commission also barred the company from imposing anti-fragmentation obligations on OEMs, as done under the Anti Fragmentation Agreement (AFA), now known as the Android Compatibility Commitment (ACC).
This order would also have an impact on app store developers like Indus OS, as it would force Google to allow developers to distribute their app stores through Play Store.
MapMyIndia CEO Rohan Verma, whose company has been on the heels of Google when it comes to maps, navigation and GPS, welcomed the CCI judgement.
Verma explained how MapmyIndia has been creating digital maps since 1995, and offering local search and navigation service since 2004 “far before foreign Big Tech even launched globally, let alone India.”
“Those who have downloaded and used Mappls app realise how much better it is, and those who use MapmyIndia Mappls APIs and technology solutions realise how much more powerful it is. We hope this is the start of a change in momentum from the last 15 years,” he added.
For Deshmukh of Indus OS, this will be an opportunity to go ahead with plans to launch its own home-grown app store in the next couple of months.
Snehil Khanor, member of Alliance of Digital India (ADIF) executive council and founder of dating app Truly Madly, too, welcomed the CCI ruling.
“We now eagerly wait for the order of the Google payments issue (30 percent tax) and hope that will also provide relief from the hefty commission that Google is imposing on digital startups,” Khanor said.
Ex-CCI chief Dhall said that Google has the option to appeal against the CCI order.
“Google can appeal at the Competition Appellate Tribunal and request a stay of the CCI order. There is also an opportunity for a second appeal at the Supreme Court,” Dhall said.
If Google gets a stay order, it would mean that Google will not be bound to comply with the CCI order till it’s appeal is decided.
