CCI fines Google Rs 1338 crore for anti-competitive practices

The Competition Commission of India has imposed a penalty of Rs 1337.76 crore on Google for “abusing” its dominant position in multiple markets in the android mobile ecosystem. Besides, the fair trade regulator has also directed the internet giant to cease and desist from unfair practices. Google has also been directed to modify its conduct within a defined timeline under CCI guidelines.

“Smart phone devices need an operating system to run applications and programs. Android is one such mobile operating system which was acquired by Google in 2005. The commission has examined the various practices of Google w.r.t licensing of android mobile operating system and various proprietary mobile applications of Google. Play Store, Google Search, Google Chrome, You Tube are all such examples,” CCI said in a press statement.

Google vs Apple

CCI further mentioned that 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 commission 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. 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.”

Further, in relation to app stores, the commission noted that the demand for the same, 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.

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. 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. Based on its assessment, the commission found Google to be dominant in all markets.

30-day deadline

“In relation to computation of penalty, the commission noted that there were glaring inconsistencies and wide disclaimers in presenting various revenue data points by Google. However, in the interest of justice and with intent of ensuring necessary market correction at the earliest, the commission quantified the provisional monetary penalties on the basis of the data presented by Google. Accordingly, the commission imposed a penalty of Rs. 1337.76 crore upon Google on provisional basis, for violating Section 4 of the Act. Google has been given a time of 30 days to provide the requisite financial details and supporting documents,” the CCI said in the statement.

Other allegations against Google

A few weeks ago, Google was accused of dictating terms and conditions that favoured itself, but were not justifiable for content writers associated with news organizations. The case will be combined with two other ongoing lawsuits against the search engine.