Anti-Competitive Practices of Google – Umar Javeed v. Google LLC

29th December, 2022 - 6:44 am Categories: Legal Issues News & Updates 0 Comments

INTRODUCTION

One of the main prohibitions under the Competition Act, 2002 is abuse of dominant position under Section 4. If any enterprise performs any act which imposes unfair or discriminatory condition or price; limits or restricts sale of goods or services to meet the competition; indulges in practices which denies market access to competitors; uses its dominant position in one relevant market to enter into, or protect another relevant market, is said to abuse its dominant position in the relevant market[1]. The onus of proving the existence of dominance and abuse, falls on the Commission. The Commission thus, provides an opportunity to other competitors to help determine whether an enterprise has violated the provisions of the Act.

Google‘s Dominance

Google operates and controls the Android operating system and licenses other proprietary applications, Original Equipment Manufacturer’ (“OEM”) use this operating system and Google’s apps. While using mobile devices, Google enters into several agreements with OEMs to regulate their rights or it can be said that these agreements deny market access to OEM’s.

They are as follows:  Mobile Application Distribution Agreement (“MADA”): MADA grants OEMs a license to distribute Google’s proprietary apps (such as, Google Play Store, Gmail, Google Maps, Google Search, Google Drive, Google Chrome, YouTube, etc), called Google Mobile Services (GMS), free of If an OEM wants to install even one app from GMS, the full suite of apps will be preloaded on the device.

1. Anti-fragmentation Agreement (“AFA”): OEMs are not allowed to manufacture or develop hardware for themselves or third party which is not compatible with Android according to the AFA agreement.
2. Android Compatibility Commitment Agreement (“ACC”): ACC authorizes OEMs to manufacture devices or device components for third party devices that are not Android Compatible Devices, as long as the device is marketed under a third-party brand and the OEM does not market such devices.
3. Revenue Sharing Agreement (“RSA”): According to this agreement if any third-party application, bookmark, product, service, icon, launcher, third party hot-word in the qualified device is an alternative service to Google Search/ Google Assistant, this agreement forbids the OEMs from preloading or installing them. The revenue generated from Google search advertisings are shared with OEM and if OEMs does not pre-install any competing general search engine or any device within the defined portfolio of smart devices. Similarly, OEMs loses the revenue payments from Google if an OEM preinstalls such services for a device, for that device as well as all other devices in its portfolio on which general search service is not pre-installed.

Various MADA contracts impose unreasonable terms on OEMs, and OEMs have no choice but to accept them. Google does not negotiate material terms of MADA that have been shown to lead to anti-competitive behaviour. Further, the pre-installation obligation for the entire bouquet of Google apps is an additional obligation imposed on the OEM if the OEM wishes to pre-install any one of Google’s apps. These practices by Google, especially when viewed in conjunction with AFA or ACC and RSA, are anti-competitive because the restrictions prohibit alternative providers from outperforming Google’s apps[2]. Mandatory pre installation of entire GMS suite under MADA amounts to imposition of unfair condition on the device manufacturers and thereby infract provisions of Section 4(2)(a)(i)[3] and Section 4(2)(d)[4] of The Competition Act, 2002.

• As stated earlier, MADA requires non-exclusive preinstallation of Google Search,
  Search Widget, Google Chrome in all Android devices. Google secures exclusivity
  and rivals are forbidden from pre installation due to devices not covered by RSA,
  giving Google an edge to its competitors.
• Rival search service provider can only secure a relatively poor position on the
  second or third screen of a device due to contractual agreements with OEMs. This
  means that competing search services have not been able to achieve a more
  prominent display on devices and will always been inferior to Google's placement
  as users are more likely to use Google on the home screen.
• On the home screen Google Chrome with Google Search is already set as default.
  Google Search is set as default not only in Chrome, but also in the Safari browser,
  the only pre-installed browser on Apple devices. Except Microsoft Edge, Firefox,
  and Opera, also uses Google search as the default.

Google leveraged its dominant position in Play Store to protect its dominant position in online general search in contravention of Section 4(2)(e)[5] of the Act.

The OEMs cannot access Google Chrome and YouTube separately from Google Play Store. Google’s action of linking the Play Store to Google Chrome/ YouTube significantly restricts competition in the market by seizing sales channels to competitors, thereby reducing incentives for innovation and reducing the choice for the user. In this way, Google facilitates protection and strengthens its dominance not only in the market for non-OS-specific web browsers, but also in the market for general search services i.e., Google Chrome with Google Search is already set as default by the condition of MADA. For an OEM to install Google’s Play Store on its mobile device, it has to pre-install YouTube also as per MADA. Whereas, in Microsoft Windows phone & Apple iOS, YouTube is available for download as an independent and standalone app. This tie-up of Google Chrome and YouTube with Play Store violates Section 4(2)(e) of the Act.

[Images Sources : Shutterstock]

If Google’s proprietary apps are pre-installed in a single Android device (e.g.: smart phones), the OEM is restrained from using Android fork (incompatible variants) in respect of all other devices (e.g., smart watches, smart TVs, etc.). Google requires Google Mobile Services (GMS) licensees to submit all Android devices to Google for approval, regardless of whether the devices have GMS pre-installed or are based on the Android Open-Source project.

Any Android fork developer would require enough OEMs who are willing to install the forked OS on their respective devices. The OEMs have the expertise to develop smart mobile devices and without their support, the fork developer is restricted to enter the market, making it difficult to effectively compete with Google. By making pre-installation of its proprietary applications conditional upon signing of AFA/ACC for all android devices manufactured or distributed by the manufacturers, Google has reduced the incentive of the manufacturers to develop and sell devices operating on alternative versions of Android, thereby limiting technical or scientific development to the prejudice of the consumers, contravening the provisions of Section 4(2)(b)(ii)[6] of the Act.

An account has to be created for distributing an app through Google Play Store for which an app developer has to agree to the Developers Distribution Agreement. The Developer Terms of the Google’s Play store policies are set to be ambiguous, vague, unilateral, biased, and arbitrary. The burden to constantly track the developer Terms and check for amendments in the policies is placed on app Developers by Google. Google also imposes a broad limitation of liability clause on app developers which is one sided.

On 20^th October 2022, the Commission imposed a penalty of Rs. 1337.76 crore upon Google for abusing its dominant position in the market and in violation of Section 4 of The Competition Act, 2002.

CONCLUSION:

As consumers, we have noticed, there are certain Google owned apps which cannot be uninstall even though we want to, and the App Developers face issues with the role Google plays in the Android Ecosystem. These practices could not remain unchecked by the Commission.  The Commission promotes a healthy and vibrant market economy by effectively investigating the alleged dominance and monopoly in the market and analyses how the abuse might harm the competition by providing appropriate remedies.

Author: Rakhi Nargolkar, SVKM’s Jitendra Chauhan College of Law, University of Mumbai, 3-year LLB, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at Khurana & Khurana, Advocates and IP Attorney.

REFERENCES

1. Umar Javeed v. Google LLC, 2022 SCC OnLine CCI 61
2. The Competition Act, 2002

[1] Competition Commission Act, 2002; Section 4

[2] Id., Section 3

[3] Id., Section 4(2)(a)(i)

[4] Id., Section 4(2)(d)

[5] Id., Section 4(2)(e)

[6] Id., Section 4(2)(b)(ii)