Google calls CCI fine a setback for users and businesses

Google said on Friday that the heavy penalty levied on it by India's competition watchdog is  a “major setback” for businesses and consumers in India and will open users to “serious security risks” while raising the cost of mobile devices in the country. 

On Thursday, the Competition Commission of India (CCI) said it is imposing a Rs.1,337 crore fine on Google for abusing its dominant position in the Android ecosystem. CCI also issued a cease-and-desist order that prohibits Google from indulging in anti-competitive practices. Google added it will review the CCI decision to evaluate its next course of action.

“Android has created more choice for everyone and supports thousands of successful businesses in India and around the world. The CCI's decision is a major setback for Indian consumers and businesses, opening serious security risks for Indians who trust Android's security features, and raising the cost of mobile devices for Indians. We will review the decision to evaluate the next steps,” a Google spokesperson said in an email statement.

Though the quantum of the fine seems huge, industry experts said it will not have a major impact on Google. "The fine itself is not particularly significant — if you look at it, what CCI has fined Google is around 5% of what the European Union has penalized Google for its anti-competitive practices with Search and other products," said Prasanto K. Roy, a technology policy consultant. That said, Roy pointed out that it's the ruling that will impact Google’s business model. “A large part of the order is based on channeling the company's Search and other apps that it feeds through Android. The moment you restrict Search, that is a fairly significant diversion of revenue,” added Roy. 

Trishee Goyal, research fellow at Vidhi Centre for Legal Policy, concurs that the ruling will impact the commission that Google is earning from its Play Store. “It also impacts how well their apps will be distributed. If their apps are facing more competition due to reduced commission from other apps, it will also impact revenue from that stream,” she added. 

Roy believes that the CCI order will set a new precedent and can have implications globally since India is a major Android market. According to Counterpoint Research, nearly 97% of India's 600-odd million smartphone users are on Android. “Most European regulations have been focused on Search, and even though India looks up to the EU to regulate tech, Asian markets look at India for the same. This could be a major point of interest, as a result,” said Roy. 

It will eventually force Google to alter some of its practices. “Google will likely challenge CCI's court order, and may even offer other benefits such as opening up in-app commissions to keep their market position intact,” a legal expert told Mint on the condition of anonymity. 
The person said this regulation can affect the way the world's most popular operating system functions. 

“This may offer a precedent for other tech firms such as Amazon — which restricts seller listings to prioritize its affiliated brands,” he added. 

CCI further said in its order that Google should not force OEMs to pre-install a bundle of apps, let them choose the Google apps they want to pre-install. Also, licensing of Play Store should not be conditioned on pre-installation of Google search services, Chrome browser, YouTube, Google Maps, Gmail, or other Google apps. CCI also said that Google should allow the distribution of third-party app stores through the Play Store. 

Goyal believes this is a gaming-changing move and can increase competition in the market. 

“Google doesn't charge the same commission from its apps as it does from other non google owned apps. This puts third-party apps at a disadvantage when it has to compete with Google's in-house apps because commission costs often end up getting passed on to the consumer one way or the other” she added. 

“One reason why Google apps are better than others is because of the network effect. The more widely an app is used the better data it gets to improve its systems. For instance, Chrome is used so widely because anyone with an android phone will have it on their device,” she added.