ANTI–TRUST CASES

1. Context

The Competition Commission of India has fined Google twice for abusing its dominant position in the market and for anti-competitive policies in its in-app billing and payment processing.

CCI directed Google to desist from indulging in anti-competitive practices and asked to implement around 10 measures.

2.Issue

• Android OS, which is a propriety product of Google, is licensed to those who manufactured devices.
• Google ties or bundles certain Google applications and services such as Google Chrome, Youtube, and Google Search, etc. that are distributed on Android devices with other Google applications, services, and Application Programming Interfaces of Google.
• The device manufacturers are given a percentage of Google‘s search revenue from their devices as consideration for the pre-installation of Google apps.
• This brings down the costs for device manufacturers while also allowing Google to increase its user base.

3.Dominant Position

It means a position of strength enjoyed by an enterprise in the “relevant market” in India, which enables it to operate independently of competitive forces prevailing in the relevant market, or affect its competitors or consumers or the relevant market in its favour.

Android was a “dominant player “in the market –in the licensable smart mobile device OS in India, the Android market share grew to 98.47% in 2018 from 35.4% in 2014.

4.Differences In Two Business Models

Apple's business is primarily based on a vertically integrated smart device ecosystem that focuses on the sale of high-end smart devices with state of art software components.

Whereas Google's business is 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 the sale of online advertising services by Google.

5.Cases against Google

• The penalty was imposed on the company for abusing its dominant market position concerning its play store policies.

Three cases were brought against Google by

1. Alliance of Digital India Foundation, which claimed to be an alliance of individuals which aims at improving the start-up ecosystem in India.
2. Match Group, whose portfolio companies include dating apps such as Tinder, Hinge, OkCupid, and Ablo, and a confidential third complainant.

•  The commission found that Google was using anti-competitive practices in its app billing and payment processing by favouring Google Pay over other players Play store charges a 30 % commission from app providers for allowing them to use the Play store's payments system and Google Play In App Billing.
• The App provider’s grievance was that they had no option to prefer using alternative payment aggregators which charge lower commissions than Google.
• Issuing a cease and desist order, the CCI directed Google to modify its conduct within a defined timeline. This includes allowing mobile app developers to use third-party payment services on their app store.

6.Penalty

• Section 27 of the companies act the CCI has the power to “impose such penalty as it may deem fit which shall be not more than 10%of the average turnover for the last three preceding financial years, upon each of such person or enterprises which are parties to such agreements or abuse.
• In the Android case, CCI imposed a penalty amounting to 105 of revenue generated or arising /accruing from India or attributable to services delivered in India.
• In the Play store ruling the CCI imposed a penalty to the tune of 7% of the total revenue of Google‘s business operations in India.