Updated: Nov 3
The Competition Commission of India (CCI) is known for its proactive approaches in addressing the anti-competitive practices of certain FAAMG companies in India. Yesterday at 8.57 PM IST, a Press Release by PIB informed about the CCI’s imposition of penalty on Google, which reads as follows:
The Competition Commission of India (Commission) has imposed a penalty of Rs. 1,337.76 crore on Google for abusing its dominant position in multiple markets in the Android Mobile device ecosystem, apart from issuing cease and desist order. The CCI also directed Google to modify its conduct within a defined timeline.
In this article, I will deconstruct the press release and elaborate about the purpose, significance and legal outlook that CCI and Google could take up on this order. To begin with, the order is significant. The detail however lies in the purposive aspect that the Commission is interested in.
The Order, Deconstructed
The CCI focuses on the 5 kinds of markets in India, with which the Android Mobile Device ecosystem can be related with, on the basis of which the Commission imposes penalty on Google:
Market for licensable OS for smart mobile devices in India
Market for app store for Android smart mobile OS in India
Market for general web search services in India
Market for non-OS specific mobile web browsers in India
Market for online video hosting platform (OVHP) in India.
Now, this is no revelation, because the markets posited by the Commission are obviously critical, when it comes to Indian digital markets. According to CCI, the legitimate basis of delineating the 5 markets comes from understanding Google and Apple’s business incentives behind even dominating mobile device and applications ecosystem. Google’s approach towards garnering consumers is a horizontal approach, i.e., “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.“ The reason this is a horizontal approach is, because ecosystem, which Google has maintained, relies on the proximity of services, which could be interconnected or limitedly distinct, for example, YouTube, Google Maps, etc. On the other hand, Apple’s larger focus is creating a vertical chain of high-end smart devices, in the form of an ecosystem (which we can understand from Apple’s Privacy Features, thereby clearly affecting Meta (Facebook), Spotify and other companies).
In a nutshell, the main 3 points depicted in this diagram made by CCI explain why they have imposed penalty on Google, as of now, focusing on the three consumer groups. Now, on OEMs, the CCI has made valid points, which, despite being preliminary, has substance. Let us also analyse what measures regarding OEMs, have been recommended by the CCI:
OEMs shall not be restrained from (a) choosing from amongst Google’s proprietary applications to be pre-installed and should not be forced to pre-install a bouquet of applications, and (b) deciding the placement of pre-installed apps, on their smart devices.
This measure is genuine, and practical enough. Deciding the placement of pre-installed apps, is undoubtedly connected to the lack of choice that Google offers via making its proprietary applications, when they are pre-installed.
Licensing of Play Store (including Google Play Services) to OEMs shall not be linked with the requirement of pre-installing services and apps offered by Google.
Delinking the pre-installing requirement is also a genuine measure, which is a consumer-friendly measure, to promote the economics of choice.
Google shall not deny access to its Play Services APIs to disadvantage OEMs to ensure interoperability of apps between Android OS to meet compatibility requirements of Android Forks and Google.
The measure is reasonable, and would create safer spaces for OEMs in India, especially in the digital markets.
Google shall not impose anti-fragmentation obligations on OEMs.
OEMs should be permitted to manufacture / develop Android forks based smart devices for themselves.
Google shall not incentivise or otherwise obligate OEMs for not selling smart devices based on Android forks.
Now, there is no doubt that the measures proposed in good faith, are rational and bear context. Now, it would be appropriate to assess the repercussions of this order, only with a competition law perspective because the technology law governance framework in India, is yet to be legislated beyond the Information Technology Act, 2000, which again, considering the 2021 Rules, only would trace the role of Google as an intermediary. We have to understand that on technology-related adherence, big tech companies have not properly adhered with India’s requirements. Part of the blame goes to the companies not being concerned, while the other issue lies with the Government for coming up with impractical rules. This excerpt from an article published by Swarajya on the IT Rules explains the issues, for example, in the Part II, Rule 5, Sub-rule 8:
The author explains the issues in this sub-rule:
If the intention of the government was to bar the intermediaries from playing publishers, then there was no need to lay down elaborate ground rules for censoring. Some might want to argue that this censoring is in relation to the orders passed by the court or the government but for such requests, others clauses have adequately dealt with in depth.
Another error was pointed out in Rules 3(2) and 4(6) by the author, which further explains the Government’s failure in creating practical regulations:
This is in addition to all the requests that the intermediaries have to comply with from the law enforcement agencies and the government departments. Given the number of users, it would be practically impossible for any intermediary to adhere to these rules even if they hire an army of employees to execute it. It seems that the rules have been framed to ensure non-compliance and create numerous loopholes to punish intermediaries than come up with a decent mechanism that is aimed at resolving genuine problems.
Even the earlier Data Protection Bill proposed had innumerable errors, which needed correction. Unless any consistent regulation or law is approved, which has a flexible approach, mere posture to regulate does not suffice. It is reasonable to state that CCI’s approach towards FAAMG companies and their anti-competitive practices, at best, has been consistent and specific. The problems raised are clearly genuine.
Can there be a Possibility of Self-Regulation and Ex-Ante Measures?
Now, it is obvious that the CCI points out to the bundling of services and products and leveraging practice attributed to the same in the case of Google. However, there are genuine concerns on the regulatory landscape. Vikas Kathuria discusses the same in an article for Observer Research Foundation:
The antitrust issues that have arisen elsewhere have resonated in India as well. There have been five cases against Google before the Competition Commission of India (CCI) spanning search, Android OS and Play Store. […] While the CCI is doing its bit to ensure fairness in digital markets, a need for some form of regulation is already felt. In its e-commerce market study, the CCI has mentioned the need for marketplace platforms adopting self-regulation to ensure transparency concerning search ranking; collection, use and sharing of data; user review and rating mechanism; revision in contract terms; and discount policy. This form of regulation, however, falls far short of preemptive ex-ante regulation that the EU has suggested in the proposed Digital Markets Act for ‘gatekeeper’ platforms. Consequently, India should adopt binding ex-ante regulations for digital ‘gatekeepers’ to ensure market contestability for businesses including start-ups and fairness for users.
The CCI’s measures, if looked closely, show that they might indicate Google to adopt some course correction measures to indicate their focus towards self-regulation, based on the details and data Google had offered them. Although, self-regulation measures can be legitimised through any new rules or notifications, the Commission in the case of cab aggregators, has released an advisory on self-regulating measures. Now, as Kathuria suggests, an ex-ante regulation could be a good tool for the Commission to further steer their measures on “gatekeeper platforms” like Google and Apple. However, a reason that CCI has not come up with any proposed regulation, is because advisories and orders, may be used for a piecemeal approach to address anti-competitive practices, considering the strategic market status (SMS) of companies of those sorts. In the Indian case, there is no legal understanding or basis of the term “strategic market status”. Maybe the Commission could find it reasonable not to integrate their focus on companies which may fit the category of SMS, as of now. Nevertheless, the Government of India is certainly interested to create a technology and competition governance framework, which addresses the problem of vulnerability in the markets due to the presence of companies in multiple sectors. We can safely state that this order, is clear in addressing Google’s dominant position. However, from a governance perspective, it is necessary that the Commission may opt to estimate what kind of self-regulatory measures can be adopted with time.
Common Issues, Special Approach
India’s competition law approach towards FAAMG companies is specific and practice-focused, despite the obvious fact that many issues raised by the regulatory body on the anti-competitive practices, are commonly faced by regulators across the globe. Biding time would be necessary, before self-regulatory or ex-ante measures could be endorsed by the Government. However, the CCI through such orders and advisories, can attempt to address and embrace India’s potential to become a regulatory superpower, with a hedging approach. As Nikhil Pahwa, the founder of Medianama, points out , Google may go to the Indian courts to challenge CCI’s order, due to hefty restrictions on their business model and practices by the regulator.
As the tweet quoted above explains, enabling more security and fragmenting Google’s power to control the ecosystem may be a reasonable move. However, the cross-compatibility of applications can only be dealt by data and tech-related regulatory solutions. The lack of compliance among technology companies however has to be dealt with a comprehensive outlook which may solve the multi-sector implications of the companies’ presence, with time. Additionally, Google does not support the proposition of having a self-regulatory body, according to Reuters, which Facebook India had suggested. Perhaps, decoupling is not the approach that competition regulators adopt. Blending domestic regulations and public policy choices that governments make, in the case of digital technologies, would create sustainable information economies and chains.
Recently, Google was suppose to impose 15-30% commission on in-app sales on Play Store, while denying app developers the choice to opt for other payment gateways in India.
Another penalty of approx. 933 cr INR has been imposed by CCI. This is a landmark development.
Deadline for implementation of this billing policy was set on October 31, 2022.
In addition, a new order has been published by CCI stating Google's GPBS to be anti-competitive. Point 9.2 in the order is clearly landmark in virtue and action. The assessment explains the Commission's conclusions:
Point 9.2 in the measures explains a critical action Google is required to do, which will hurt them deeply:
Google shall not impose any Anti-steering Provisions on app developers and shall not restrict them from communicating with their users to promote their apps and offerings, in any manner.
If we look these measures consecutively, we can say that the approach taken by CCI is quite competent and will have major implications ahead for good.