CCI imposes penalty on Google for abusing dominant position in android ecosystem

CCI imposes penalty on Google for abusing dominant position in android ecosystem

The technology giant has been fined Rs.1,338 crores

The Competition Commission of India (CCI) has imposed a penalty on Google for abusing its dominant position in multiple markets in the Android mobile device ecosystem It has also been issued a cease-and-desist order.

The competition watchdog has further directed the US-based company to modify its conduct within a defined timeline. It can neither force Original Equipment Manufacturers (OEMs) of smart devices to pre-install their own apps nor restrict users from uninstalling such apps. Also, it cannot offer any incentives to OEMs to ensure the exclusivity of its search services.

The Commission ordered Google to allow the users (during the initial device setup) to choose their default search engine for all search entry points. It ruled, "Users should have the flexibility to easily set and change the default settings in their devices in minimum steps."

Furthermore, Google has been directed to allow the developers of other app stores to distribute their app stores through Play Store.

The CCI noted that Google leveraged its dominant position in the app store market for the android operating system (OS) to protect its position in online general search. The technology giant leveraged its dominant position to enter and protect its spot in the non-OS-specific web browser market.

Smart mobile devices need an OS to run applications and programs. Android was one such mobile OS, acquired by Google in 2005. The anti-trust body examined its various practices regarding licencing and applications including the Play Store, Google Search, Google Chrome, and YouTube.

While Google argued about the competitive constraints faced by Apple's iOS ecosystem, CCI noted the difference in the two business models, which affect the underlying incentives of business decisions.

The Commission held, "Apple's business is primarily based on a vertically integrated smart device ecosystem, which focuses on the sale of high-end smart devices with state-of-the-art software components. Whereas Google's business is driven by the intent to increase users on its platforms. This is done to interact with its revenue-earning online search service, which directly affects the sale of online advertising services."

CCI noted that the demand for the service came from three different sets of consumers (a) Smart device OEMs wanting to install an app store to make their smart devices commercially viable and marketable (b) App developers wanting to offer their services to the end users (c) End users wishing to access app stores to access content or avail other services.

Looking from the perspective of the three demand constituents, CCI found no substitutability between Google's Play Store and Apple's App Store.

While acknowledging there might be some degree of competition between the two ecosystems - Android and Apple – the Commission said it was quite limited. It reasoned that while purchasing a phone, the significant factor in the mind of an end-user was the hardware specifications and the cost of the device.