New Delhi: Global tech giant Google faces a fine of more than Rs 136 crore if India’s anti-trust watchdog finds it guilty of using its dominance to cut market access for smaller players, ThePrint has learnt.
The US firm will face its second penalty from the watchdog in less than a decade if an investigation launched by the Competition Commission of India (CCI) this April concludes that Google employed unfair practices.
Spelling out the penalty Google is likely to face, a source in the CCI said the investigation may take another two years to complete.
“The implications of the case are serious and the CCI is taking the matter seriously,” the CCI source added on condition of anonymity.
On 16 April 2019, the CCI ordered an investigation into Google’s market practices, to see whether the company was abusing its dominant position among operating systems.
According to the complainants, “Google mandates smartphone and tablet manufacturers to exclusively preinstall Google’s own applications” and “prevents smartphone and tablet manufacturers in India from developing and marketing modified and potentially competing versions of Android”, practices that they claim limit market access to rival businesses and reduce a potential rival’s incentive for innovation.
The CCI order also quotes Google’s defence, with the tech giant saying that the “preinstallation obligation is limited in scope”.
Equipment manufacturers, it said, “can and do use the remaining space (apart from that occupied by Google apps) to preinstall and promote… both their own, and third-party apps… and offer them the same or even superior placement”.
“Android users have considerable freedom to customise their phones and to install apps that compete with Google’s. Consumers can quickly and easily move or disable preinstalled apps, including Google’s apps,” it added.
As for the second allegation, about not allowing competing versions of the Android operating system, Google said doing so could threaten its market.
“If companies make changes to the Android source code that create incompatibilities, apps written for Android will not run on these incompatible variants. As a result, fewer developers will write apps for Android, threatening to make Android less attractive to users,” it added.
The CCI order directs the investigation to be completed within 150 days, but the source said it was unlikely. “This investigation can take an average of two years… It’s going to take years to conduct a thorough investigation.”
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The possible penalty
The investigation is the result of a case filed by contract employees of the CCI. However, it will be carried out by permanent employees of the CCI’s investigation team, which has around 30 members. “So yes, it will take us some time to investigate the matter,” the CCI source said.
Asked about the likely fine, the source added, “It’s too soon to tell but Google may be fined more than what it was fined last time.”
The last time referred to here came in 2018, six years after the CCI ordered an investigation against Google on a complaint filed by Matrimony.com Limited, which runs the popular matchmaker service Bharat Matrimony, and others, alleging that the tech giant abused its “dominant position” in online web search and web advertising. In February 2018, the CCI found the tech giant guilty and fined it Rs 135.86 crore.
The penalty is currently under appeal, according to a Reuters report.
According to Reuters, Google has previously said it will cooperate with Competition Commission of India “to demonstrate how Android has led to more competition and innovation, not less”.
ThePrint mailed Google seeking its comment on the investigation, but didn’t get a response until the time of publishing. This report will be updated when Google responds.
India is one of 10 countries where Google is being investigated for anti-trust breaches, the others being Canada, Russia, South Korea, Brazil, Argentina, France, Germany, Italy, and the US.
So far, anti-trust penalties against Google exceed $9 billion, the bulk of which have been imposed by the European Commission, the executive branch of the European Union, in three cases.
The CCI noted in its April 2019 order that “the commission is of the prima facie opinion” that certain Google practices are in “contravention” to the law. But the CCI source said this meant nothing. “At the end of the investigation, the commission may or may not find Google guilty of the allegations,” the source added.
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What experts say
Mandar Kagade, a regulatory policy expert, said Google had a fair chance in the case. “The investigation is still in its early days. However, Google may have grounds to defend each of the restrictions alleged by the complainants,” he added.
Kagade said this was because some of the agreements companies make with Google “are critical to improve the reliability of apps for consumers, the ultimate beneficiary for any anti-trust regime”.
To conduct a fair investigation and ensure consumer interests are protected, Nisha Kaur Uberoi, the national head for competition law at legal firm Trilegal, said, “The CCI will also need to consider the investment made by Google for developing Android and the choice created for consumers as well as app developers who built their businesses with Android.”