Analysis of Mr. Umar Javeed and Others Vs. Google LLC and Another 39/2018 order dated 20/10/2022
Anti-Competitive Agreement and Prohibition of abuse of dominant position
Sub Section (1) of section 3 of the Competition Act, 2002 (Act) provides no enterprise or association of enterprises or person or association of persons shall enter into any agreement in respect of production, supply, distribution, storage, acquisition or control of goods or provision of services, which causes or is likely to cause an appreciable adverse effect on competition within India and Sub-section (1) of section 4 of the Act provides that no enterprise or group shall abuse its dominant position. It is not the dominant position but its abuse which is prohibited.
It is also worth noting that Competition Commission of India (CCI) imposed a monetary penalty of Rs. 1337.76 crore on Google INC for anti-competitive practices in relation to Android mobile devices, as decided in Mr. Umar Javeed and Others Vs. Google LLC and Another
This investigation is closely modelled after similar proceedings before the European Commission (“EC”), wherein Google was fined $5.4 Billion for leveraging the dominance of Google Play Store to unfairly benefit its proprietary mobile applications, and to foreclose the development of rival mobile OSes.
Analysis of Mr. Umar Javeed and Others Vs. Google LLC and Another 39/2018 order dated 20/10/2022
Forum: Competition Commission of India
Citation: 39/2018
Coram: Mr. Ashok Kumar Gupta, Chairperson, Ms. Sangeeta Verma, Member and Mr. Bhagwant Singh Bishnoi, Member
Informant: Umar Javeed, Sukarma Thapar and Aaqib Javeed
Opposite Party: Google LLC and Google India Private Limited
Facts of the Case:
The present Information has been filed by Mr. Umar Javeed, Ms. Sukarma Thapar and Mr. Aaqib Javeed under Section 19(1)(a) of the Competition Act, 2002 (the, ‘Act’) against Google LLC and Google India Private Limited, alleging inter alia abuse of dominant position by Google in the mobile operating system related markets in contravention of the provisions of Section 4 of the Act. The Informants are stated to be consumers of the Android based smartphones.
Android is an open-source mobile OS, meaning that it can be freely used as well as customized by anyone. Android’s open-source code enables third-party manufacturers to potentially customize and develop their own modified versions of Android (also knows a Forked OSes). Google also acts as an app developer and offers a suite of its proprietary apps in a bundle called Google Mobile Services (“GMS”). These apps include a total of 9 Mobile applications including the Play Store, Google Search, Chrome etc.
While the Android OS can be licensed by device manufacturers by entering into simple android license agreements, to install the GMS and get access to Google’s proprietary Application Programming Interface (“APIs”), the manufacturers have to enter into two additional agreements:
- Mobile Application Distribution Agreement (“MADA”) which obligates the device manufacturers to pre-install the entire bundle of mobile applications in the GMS, and place them at prominent locations on the device; and
- Android Compatibility Commitment (“ACC”), which places restrictions on the extent to which device manufacturers can customize the Android OS.
Challenging these two agreements, it was alleged that by way of tying certain Google applications which are considered irreplaceable (e.g. Play Store) with other applications for which reasonable alternatives exist (e.g. Play Music, Google Search etc.), Google is preventing the development of rival mobile applications. Further, it was alleged that by imposing the ACC restrictions, Google is unfairly reducing the incentives of third-party developers to make their own modified Android Forks, thereby restricting innovation in the market.
Timeline of the case:
Issues Raised
a) Whether mandatory pre-installation of entire GMS suite under MADA amounts to imposition of unfair condition on the device manufacturers and thereby infract provisions of Section 4(2)(a)(i) and Section 4(2)(d) of the Act?
b) Whether Google has perpetuated its dominant position in the online search market resulting in denial of market access for competing search apps in contravention of Section 4(2)(c) of the Act?
c) Whether Google has leveraged its dominant position in Play Store to protect its dominant position in online general search in contravention of Section 4(2)(e) of the Act?
d) Whether Google has abused its dominant position by tying up of Google Chrome App with Play Store and thereby violated provisions of Section 4(2)(e) of the Act?
e) Whether Google has abused its dominant position by tying up of YouTube App with Play Store and thereby violated provisions of Section 4(2)(e) of the Act?
Arguments advanced by both parties
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. 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.
The CCI opined that the markets should be allowed to compete on merits and the onus is on the dominant players (in the present case, Google) that its conduct does not impinge this competition on merits. By virtue of the agreements discussed above, Google ensured that users continue to use its search services on mobile devices which facilitated un-interrupted growth of advertisement revenue for Google. Further, it also helped Google to further invest and improve its services to the exclusion of others. Thus, the underlying objective of Google in imposing various restrictions was to protect and strengthen its dominant position.
Judgement
Accordingly, in terms of the provisions of Section 27 of the Act, the CCI has imposed monetary penalty of Rs. 1,337.76 crore on Google INC as well as issued cease and desist order against Google from indulging in anti-competitive practices. Some of the measures that were indicated by the CCI are as follows:
i. 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.
ii. Licensing of Play Store (including Google Play Services) to OEMs shall not be linked with the requirement of pre-installing Google search services, Chrome browser, YouTube, Google Maps, Gmail or any other application of Google.
iii. Google shall not deny access to its Play Services APIs to disadvantage OEMs, app developers and its existing or potential competitors.
iv. Google shall not offer any monetary/ other incentives to, or enter into any arrangement with, OEMs for ensuring exclusivity for its search services.
v. Google shall not impose anti-fragmentation obligations on OEMs, as presently being done under AFA/ ACC.
vi. Google shall not incentivise or otherwise obligate OEMs for not selling smart devices based on Android forks.
vii. Google shall not restrict un-installing of its pre-installed apps by the users.
viii. Google shall allow the users, during the initial device setup, to choose their default search engine for all search entry points.
ix. Google shall allow the developers of app stores to distribute their app stores through Play Store.
x. Google shall not restrict the ability of app developers, in any manner, to distribute their apps through side-loading.
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