CCI imposes Rs 1,338 crore penalty on Google for abusing its dominance in Android ecoystem

The Commission in the instant matter has examined various practices of Google with respect to licensing of this Android mobile operating system and various proprietary mobile applications of Google

The Competition Commission of India (CCI) has imposed a penalty of Rs 1337.76 crore on Google for abusing its dominant position in multiple markets in the Android Mobile device ecosystem, apart from issuing a cease and desist order. The competition watchdog also directed Google to modify its conduct within a defined timeline.

According to the CCI order, Google can neither force OEMs of smart devices to pre-install its own apps, nor restrict users from un-installing such apps. Further, the US-based company can't offer any incentives to OEMs in order to ensure the exclusivity of its search services.

The competition watchdog directed Google to 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," it said.

Moreover, Google also has to allow the developers of other app stores to distribute their app stores through Play Store.

The CCI said that Google has leveraged its dominant position in the app store market for Android OS to protect its position in online general search. Further, the tech giant has 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.

Smart mobile devices need an operating system (OS) to run applications (apps) and programs. Android is one such mobile operating systems which was acquired by Google in 2005.

In this matter, the antitrust body examined various practices of Google with respect to licensing of its Android mobile operating system and various proprietary mobile applications of Google (e.g. Play Store, Google Search, Google Chrome, YouTube, etc.).

During the course of inquiry, Google argued about the competitive constraints being faced from Apple. In relation to understanding the extent of competition between Google’s Android ecosystem and Apple’s iOS ecosystem, the CCI noted the differences in the two business models which affect the underlying incentives of business decisions.

"Apple’s business is primarily based on a vertically integrated smart device ecosystem which focuses on sale of high-end smart devices with state of the art software components," it said.

"Whereas Google’s business was found to be driven by the ultimate intent of increasing users on its platforms so that they interact with its revenue earning service i.e., online search which directly affects sale of online advertising services by Google," it added.

Further, with regards to app stores, the competition watchdog noted that the demand for the service may come from three different sets of consumers i.e., (a) Smart device OEMs who wish to install an app store to make their smart devices commercially viable and marketable; (b) app developers, who want to offer their services to the end users; and (c) end users to wish to access app stores to access content or avail other services.

The commission examined the substitutability between Google’s Play Store for Android OS and Apple’s App Sore for iOS from the perspective of all three demand constituents and found that there is that no substitutability between Google’s Play Store and Apple’s App Store.

It said that there might be some degree of competition between the two mobile ecosystems i.e., Android and Apple, however, that is also limited at the time of deciding as to which device to buy.

At that stage also, the commission was of the view that the primary and the most significant factor in the mind of an end user is the hardware specification and the device price.