Google Faces The CCI Heat
India’s fair-trade regulator, the Competition Commission of India (CCI) has slapped INR 1337 crore fine on Google. The tech giant has been given 30 days to provide all its financial documents and also to modify its conduct in a stipulated timeline. Failure to comply will lead to an escalation in fine. The allegations are based on Google abusing its dominant position across five verticals, namely, the app store for an android online video hosting platform, non-operation system (OS) web browsers, licensable OS, and general web service.
What is the case?
The case goes back to about four years ago when CCI started investigating Google over its android dominance. Google allegedly forces smartphone manufacturers to install its applications like Google Chrome, Google play store, Google maps, Youtube, Gmail etc. This is done under two stringent laws, namely, Mobile Application Distribution Agreement (MADA), and the other is an anti-fragmentation agreement. This deal is signed by every original equipment manufacturer (OEM) under the pressure of the tech giant. This will force manufacturers to depend on the android operating system, due to which the phone manufacturers will not be able to develop alternative models. CCI thinks this monopoly will give an unfair advantage to Google. The company was facing a similar allegation in Europe earlier by the European Commission, where it was asked to pay 20 Mn USD.
Why is this issue important?
This issue assumes significance because over 90 per cent of smartphones in India are android based, as are 75 per cent in the world. In a way, android holds a monopolistic position over the smartphone market. While we all use android to download our favorite applications, we are using Google-driven software to execute the same. This is also a deterrent to OEMs who do not want a single company's monopoly. Even if Google claims that Apple is a viable rival, the argument will not be strong. First because of the market dominance, and second because Apple has a completely different business model. Google is not letting any rival enter the market, be it in search, music, video streaming, or anything else.
So which laws are violated?
The Competition Act of 2002, Section 4 speaks about the abuse of a dominant market position by any singular body. Clause 2 (d) of the section speaks about the conclusion of contracts, and acceptance of contracts by the other party only if they accept stringent rules of the host party. To put it simply, you have to agree to the terms and conditions of the dominant party if you would like to conduct any business with them. For example, Google can arm-twist Samsung to accept its terms, only then will it share the android operating service license with them. Given that we cannot even uninstall the Google apps once we purchase a device makes the violation case even stronger. Further, Google had also launched a ‘Premier Design Program’ that promised smartphone manufacturers a greater share of search revenue Google generates if they do not install third-party applications on their phones. This further ensures Google’s sole dominance in the android marketplace.
This is not the first time CCI has fined Google. The first instance dates back to 2018 when it imposed a fine of Rs 136 cr on the tech MNC for unfair business practices. The corporation is also facing a slew of anti-trust cases against it in India. It is also noteworthy that the fine imposed by CCI is nowhere close to the amount Google is compelled to pay globally by some other countries. We are yet to see when the internet major will desist from its unfair trade practices.
