CCI’s Diktats To Google: Is Anything Likely To Change?

Within days of the Competition Commission of India's order, tech major Google took a step towards implementing the regulator's directions.

The CCI had directed Google to allow app developers to use third-party billing/payment processing services for app purchases and in-app shopping. 

A week later, Google has paused the enforcement of its payments policy requiring developers to use Google Play's billing system for the purchase of digital goods and services for transactions by users in India. As this pause is in play, Google intends to "review its legal options", the update reads.  
 
It's too early, however, to call it a win for the regulator, caution experts.  

Legally, until they challenge the order and obtain a stay, CCI's order stands, said Nishant Chadha, head of research at India Development Foundation. So, they are just putting the change on hold until the situation is clearer, he said.

The reference is to the Oct. 31, 2022 deadline, which required developers in India to switch to Google's Play's billing system.  

This response by Google addresses only one of the many cease-and-desist directions by the CCI in its two orders last week.

Some of the other anti-competitive conduct fixes mandated by the regulator include: 

• No discrimination against apps for facilitating payment through other UPI options.  

• No restriction on end users to access and use within apps, the features and services offered by app developers. 

• Give smartphone manufacturers a choice in pre-installation of Google's proprietary applications.  

• Decouple licensing of Play Store from requirement of pre-installing Google search services, Chrome browser, YouTube, Google Maps, Gmail or any of its other applications.   

• No monetary or other incentives to smartphone manufacturers for ensuring exclusivity of Google's search services. 

• Set out clear and transparent policy on data that is collected on its platform, use of such data by it, who it's shared with, etc.

• Share consumer data of apps, acquired via Google Pay, with the app developers and not use it to leverage it for competitive advantage.

If you look at the orders, for both Android and Google Play Store, the trigger event is that Google is a dominant entity, Vikas Kathuria, associate professor at BML Munjal Law School, said.

In its appeals, Google would want to see the trigger event go absent by arguing, let's say, that Apple is a competitor, he said.  

But, according to Kathuria, the regulator has met the legal tests required to make its case. Abuse of dominance, he explains, results in anti-competitive foreclosure.

You are foreclosing competitors from entering into the market or for that matter staying in the market and this has been spelt out very well in CCI's orders, he said.

“Remember, if we were left with just one Microsoft, one Yahoo, there would not have been any Google. This is what we are trying to create for the future, and this is what the case of the CCI is. So far, Google is the gold standard, but should it be the only standard? The answer is a clear no.”  - Vikas Kathuria, Associate Professor, BML Munjal Law School

Google has expressed its intent to appeal against both these orders, together imposing a penalty of over Rs 2,000 crore.

As the legal battle plays out, the end game of the regulator is to stop Google from abusing its dominance.  

How Is That Likely To Play Out? 

Given that Google has faced similar scrutiny in some of the other jurisdictions, change in its business practices in those markets offers some insights. 

Take, for instance, the European Union's 2018 order, which was confirmed by the General Court just two months ago.

The EU had found that Google used its dominant position in general search services by requiring manufacturers to pre-install the Google search app and browser app (Chrome), as a condition for licensing Google's app store (the Play Store).

And that it prevented manufacturers, wishing to pre-install Google apps, from selling even a single smart mobile device running on alternative versions of Android that were not approved by Google.  

Soon after, to comply with the EU's decision, Google started auctioning slots for search engines on its Android screen.

But as this TechCrunch report points out, Google's “search” market share remains undented.

“The most interesting regional search alternatives are being priced out of a Google-devised “remedy” that favours those who can pay the most to be listed as an alternative to its own dominant search engine on smartphones running Google's Android OS,” the report claimed. 

The changes that we might see in the Indian market will depend upon how much do the CCI's remedies harm Google's business model, Chadha said. If the change in Google's revenue or profits is too high, it might force a shift to a different kind of business model, he said. 

These are all very realistic possibilities, concurred Kathuria. Google is an amazingly innovative company; so perhaps, even after the application of all the cease-and-desist directions, even if they comply with it completely, Google may still be number one.

However, what the CCI is doing is giving Google's competitors a level-playing field, he said.