Date: 27/10/2022

Relevance: GS-3: Effects of liberalization on the economy, changes in industrial policy, and their effects on industrial growth.

Key Phrases: Competition Commission of India (CCI), Android operating system, Mobile Application Distribution Agreement, “cease and desist order, pre-install Google search services, default search engine.

Why in news?

• The Competition Commission of India (CCI) has imposed a provisional penalty of Rs 1,337.76 crore ($162 million) on Google for “abusing its market dominant position” in multiple categories related to the Android mobile device ecosystem in the country.
• The antitrust watchdog said Google had abused its dominance in the licensing of its operating system for smart mobile devices, app store market for Android smart mobiles, general web search services, non-operating system-specific mobile web browsers, and online video hosting platforms.

What is the issue?

• Android operating system (OS):
  • According to Counterpoint research, 97% of India's 600 million smartphones are powered by Google’s Android OS.
  • Google operates and manages the Android OS and licenses other Google proprietary applications such as Chrome and Play Store.
  • Original Equipment Manufacturers (OEMs) or smartphone companies like Samsung then use this OS and through it, Google’s apps on their mobile phones.
  • Now, while the Android source code is openly accessible and covers the basic features of a smartphone, it does not include Google’s proprietary applications.
  • To access and use these applications in their mobile handsets, manufacturers have to enter into agreements with Google that govern their rights and obligations such as the Mobile Application Distribution Agreement (MADA), Anti-fragmentation Agreement (AFA), etc. Android Compatibility Commitment Agreement (ACC), Revenue Sharing Agreement (RSA), etc.
• Dominance in the app store market:
  • Google is the dominant player in the app store market for Android OS worldwide (except in China).
  • According to the EU, the Google Play Store accounts for more than 90% of apps downloaded on Android devices globally.
  • The CCI held that through the mandatory pre-installation of the Google Suite (which includes Play Store), consumers did not have the option of side-loading or downloading apps outside of the play store.
• Dominance in the internet search market:
  • The company has dominance in the general internet search market and the non-OS specific browser market (meaning engines like Chrome, Firefox, etc.).
  • As of last year, Google has a 92% share in the global search engine market. Therefore, by having Revenue Sharing Agreements (RSAs) with mobile manufacturers, Google was able to “secure exclusivity” for its search services to the “total exclusion of competitors”.

What has the CCI told Google to change in the Android smartphone ecosystem?

• Apart from the “cease and desist” order against Google for indulging in anti-competitive practices, the CCI has directed it to take certain measures with regard to the Android OS ecosystem. Some of the major directions include:
  • Smartphone makers should be allowed to choose which of Google’s proprietary apps they want to install and should not be forced to pre-install the whole bouquet.
  • The licensing of Play Store to manufacturers should not be linked with requirements to pre-install Google search services, Chrome browser, YouTube, Google Maps, Gmail, or any other Google apps
  • Google should allow users, during the initial device setup, to choose their default search engine for all search entry points, etc.
  • Google shall not deny access to its Play Services APIs (which allow two programs to interact with each other) to disadvantage manufacturers, app developers, and its existing or potential competitors. This, the Commission said, would ensure interoperability of apps between Google Android OS as well as alternate versions or forks of Android, and by virtue of this remedy, the app developers would be able to port their apps easily onto Android forks.
  • Google should not offer any monetary/ other incentives to OEMs such as those given in revenue-sharing agreements for ensuring exclusivity for its search services.
  • Google shall not impose anti-fragmentation obligations on OEMs, which means those manufacturers using an alternate Android version should be able to get access to Google’s proprietary apps and vice versa.
  • Google shall not restrict uninstalling of its pre-installed apps by the users.

Conclusion:

• This decision, both the penalty and the regulator’s direction to Google “to modify its conduct”, will be welcomed by everyone who realizes the power of the big IT platforms to shut out competition and, therefore, choice for the users.
• While the option of legal review is open, it is to the regulator’s credit that Google’s anti-competitive practices have been called out.
• What the mobile users of a potential digital powerhouse such as India need is an environment of real choice.

Source: The Hindu

Mains Question:

Q. How is Google allegedly violating its position, especially with regard to the Android mobile device ecosystem? What are the directions of the Competition Commission of India (CCI) to the company in this regard?