CCI imposes Rs 1,337.76 cr penalty on Google for anti-competitive practices

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 Commission also directed Google to modify its conduct within a defined timeline.

Smart mobile devices need an operating system (OS) to run applications (apps) and programs. Android is one such mobile operating systems which was acquired by Google in 2005. The Commission in the instant matter has examined various practices of Google with regard to licensing of this Android mobile operating system and various proprietary mobile applications of Google (for example, Play Store, Google Search, Google Chrome, YouTube, etc.).

For this purpose, the Commission delineated following five relevant markets in the present matter: 

1. Market for licensable OS for smart mobile devices in India
2. Market for app store for Android smart mobile OS in India
3. Market for general web search services in India
4. Market for non-OS specific mobile web browsers in India
5. Market for online video hosting platform (OVHP) in India.

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, that is, 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, that is,:

(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 considered 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 the above mentioned relevant markets.