India’s Competition Commission Thursday imposed a provisional penalty of Rs. 1137.76 crores ($162 million) on Google for anti-competitive practices in the Android devices market. The regulator found that Google abused its dominant position in five markets: (1) licensable OS for smart mobile devices in India; (2) app store for Android smart mobile OS in India; (3) general web search services in India; (4) non-OS specific mobile web browsers in India; and (5) online video hosting platform (OVHP) in India.
The commission found that Google unlawfully and anticompetitively leveraged its dominant position in the online search market and denied market access for competitors. The commission further found that agreements entered into by Google for management of the Android OS and licensing of its proprietary applications and OEMs through the Mobile Application Distribution Agreement (MADA), Anti-fragmentation Agreement (AFA), Android Compatibility Commitment Agreement (ACC) and Revenue Sharing Agreement (RSA) “guaranteed a continuous access to search queries of mobile users which helped not only in protecting the advertisement revenue but also to reap the network effects through continuous improvement of services, to the exclusion of competitors.” Through such agreements, “Google ensured that users continue to use its search services on mobile devices which facilitated un-interrupted growth of advertisement revenue for Google.”
The commission assessed the comparative competition ramifications of the business models of Apple and Google, noting:
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 i.e., online search which directly affects sale of online advertising services by Google.
The commission issued a cease and desist order to restrain Google from engaging in anti-competitive practices found to be in violation of Section 4 of India’s Competition Act of 2002. Google must also modify its conduct within a defined timeline. The provisional penalty, imposed in terms of Section 27 of the Act, was quantified by the regulator on the basis of data presented by Google. The regulator also gave Google a deadline fo 30 days “to provide the requisite financial details and supporting documents.”