New Delhi: Users of Android mobile devices will now be able to get rid of pre-installed Google apps, including YouTube and the Chrome browser, if they wish to, courtesy India’s competition regulator.
In a Thursday order, the Competition Commission of India (CCI), a statutory body under the Union government’s Ministry of Corporate Affairs, imposed a fine of Rs 1337.76 crore on Google for alleged violations relating to its dominant position, while also directing the tech giant to take various steps that will ultimately allow consumers to have wider access to apps that compete with Google’s services.
The CCI has said that Google violated rules under Section 4 in the Competition Act, 2002 (abuse of dominant position) in multiple markets and ordered the internet giant to cease such activities.
The violations related to the Indian markets for licensable smartphone operating systems (OS), the app store for Android smart mobile OS, general web search services, non-OS specific mobile web browsers, and online video hosting platforms (OVHP).
The CCI found that Google was dominant in all of these markets and was unfairly taking advantage of its position. The tools of this misuse, the CCI found, were the various types of agreements Google signs with original equipment manufacturers (OEMs) for the use of Google’s Android Operating System (OS) and Play Store.
These agreements govern the rights and obligations of the OEMs and include Mobile Application Distribution Agreements (MADAs), Anti-fragmentation Agreements (AFAs), Android Compatibility Commitment Agreements (ACCs), and Revenue Sharing Agreements (RSAs)
“MADA assured that the most prominent search entry points i.e., search app, widget and Chrome browser are pre-installed on Android devices, which accorded significant competitive edge to Google’s search services over its competitors,” the CCI said in a release announcing its decision.
“Further, Google also secured significant competitive edge over its competitors, in relation to [another] revenue earning app i.e. YouTube in the Android devices,” the CCI added.
In a statement Friday, Google said the CCI’s order was a major setback for Indian consumers and businesses.
“CCI’s decision is a major setback for Indian consumers and businesses, opening serious security risks for Indians and raising the cost of mobile devices for Indians,” the statement said. “We will review the decision to evaluate next steps.”
‘Significant entry barriers’ for Google competitors
The competition watchdog noted that Google’s competitors could never have as much market access as the US company had secured for itself through MADAs.
“Network effects, coupled with status quo bias, create significant entry barriers for competitors of Google to enter or operate in the concerned markets,” the CCI said.
Further, AFAs/ACCs “guaranteed that distribution channels for competing search services were altogether eliminated” by prohibiting original equipment manufacturers from offering devices based on Android forks, the CCI said. “It ensured that OEMs are not able to develop and/or offer devices based on forks, which are outside the control of Google.”
A fork is when a software developer uses a copy of the source code of a programme — in this case, the Android OS — to create a new software or OS based on it. Such restrictions deprived competing search services of sufficient distribution channels for their market to grow. At the same time, RSAs helped Google secure exclusivity for its search services.
Altogether, these agreements worked to leave competitors out in the cold and to deprive consumers of choice, the regulator said.
“The combined results of these agreements guaranteed a continuous access to search queries of mobile users which helped not only in protecting the advertisement revenue but also to reap the network effects through continuous improvement of services, to the exclusion of competitors,” the CCI said.
“With these agreements in place, the competitors never stood a chance to compete effectively with Google and ultimately these agreements resulted in foreclosing the market for them as well as eliminating choice for users,” It added.
The CCI also found that the mandatory pre-installation of the Google Mobile Suite (GMS) — a collection of Android apps such as YouTube, Duo, Chrome, etc — with no option of uninstalling them amounts to the imposition of unfair conditions on device manufacturers. It further said that Google had “perpetuated its dominant position” in the online search market and the app store markets to deny market access to its competitors and protect its position.
“Google, by making pre-installation of Google’s proprietary apps (particularly Google Play Store) conditional upon signing of AFA/ACC for all Android devices manufactured/distributed/marketed by device manufacturers, has reduced the ability and incentive of device manufacturers to develop and sell devices operating on alternative versions of Android i.e., Android forks and thereby limited technical or scientific development to the prejudice of the consumers, in violation of the provisions of Section 4(2)(b)(ii) of the [Competition] Act,” the CCI added.
What this means for consumers & manufacturers
One of the CCI’s decisions most relevant to consumers of Android devices is that “Google shall not restrict un-installing of its pre-installed apps by the users”.
In other words, if users find that Chrome is consuming too much of their RAM, they can now uninstall it. Or if they want to clear up space on their phone by deleting other unused Google apps, they can now do so.
The order also directed Google to allow users, during the initial set-up of the device, to choose their default search engine, and give them the flexibility to easily change the default settings in the device “in minimum steps possible”.
Google now must also allow OEMs to choose not to have Google’s bouquet of applications pre-installed on their smart devices, the CCI said, adding that Google can’t link the licensing of its Play Store services to this mandatory requirements of pre-installing Google apps.
Further, Google must allow interoperability of Android apps between its own platforms and the Android fork platforms.
This, and the decision to make Google allow developers of app stores to distribute them on the Play Store, is likely to give users in India much greater choice over the operating systems and apps they will have access to on their phones.
On Apple vs Android
During the inquiry, Google argued that it faced “competitive constraints” from Apple and that there was a degree of substitutability between its Play Store and Apple’s App Store.
The CCI, however, rejected these claims and said that the Apple and Android ecosystems followed different business models, which affected the “underlying incentives” governing their 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,” the CCI said.
Google’s business, on the other hand, it said, “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 [its] online advertising services…”
Regarding the app stores, the CCI said that the demand for app store services came from three quarters: Smart device OEMs who wish to install an app store to make their smart devices commercially viable and marketable, app developers who want to offer their services to the end users, and end users who wish to access app stores to access content or avail of other services.
“The Commission examined the substitutability between Google’s Play Store for Android OS and Apple’s App Store for iOS from the perspective of all three demand constituents and found that there is no substitutability between Google’s Play Store and Apple’s App Store,” the CCI said. “The Commission further noted that there might be some degree of competition between the two mobile ecosystems i.e., Android and Apple, however, that too is also limited at the time of deciding as to which device to buy.
Even at the point of purchase, the CCI said that the most significant factor affecting the purchase decision was the device price and its hardware specification.
Antitrust allegations not new
News reports from last week show that the European Commission, the EU’s competition regulator, was considering launching an investigation into Google’s adtech business over concerns that the tech giant might be getting an unfair advantage over rivals and advertisers. Google has reportedly had to pay up over €8 billion (about $7.7 billion) in EU antitrust fines over the last decade.
In June 2017, the European Commission fined Google €2.42 billion (about $2.39 billion) “for breaching EU antitrust rules”.
“Google has abused its market dominance as a search engine by giving an illegal advantage to another Google product, its comparison shopping service,” the European Commission’s order at the time said.
In September 2022, a US court allowed a case to proceed against Google for similar reasons.
The abuse of dominance by tech firms — not just Google — is something competition watchdogs in several major economies are struggling with.
Back in 2009, the European Commission dropped a case against Microsoft once the software major agreed to give users of its Windows platform a fair choice of internet browsers, apart from Microsoft’s Internet Explorer. In 2013, the Commission fined Microsoft $731 million for failing to live up to the agreement.
Courts in the UK are currently entertaining a lawsuit against Amazon for damages worth £ 900 million (about $1 billion) over alleged abuse of its dominant position in the online marketplace by favouring its own products.
(Edited by Asavari Singh)
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