CCI Imposes Penalty On Google For Anti-Competitive Practices
Focus:
GS II- Polity and Governance (Government Interventions)
Why in News?
The Competition Commission of India (CCI) today imposed a penalty of Rs. 936.44 crore on Google for abusing its dominant position with respect to its Play Store policies, apart from issuing a cease-and-desist order.
- The Commission also directed Google to modify its conduct within a defined timeline.
App store – a medium to monetise developer innovation:
- For app developers, app stores have become a necessary medium for distribution of their apps to the end users and the availability of app store(s) is directly dependent on OS installed on a smart device.
- An appreciation of the market dynamics in licensable mobile operating system in India makes it evident that Google’s Android OS has successfully reaped the indirect network effects.
- Google’s Play Store constitutes the main distribution channel for app developers in the Android mobile ecosystem, which allows its owners to capitalize on the apps brought to market.
- Selling of in-app digital goods constitutes an important means for app developers to monetize their creations/innovations.
- However, for in-app digital goods to be distributed to purchasing users, developers must configure their apps so that all purchases of the digital goods go through Google’s payment system, which processes the transactions.
- Google was found to be dominant in the markets for licensable OS for smart mobile devices & market for app stores for Android smart mobile OS, in India.
What are the allegations?
- Google’s Play Store policies require the App developers to exclusively and mandatorily use Google Play’s Billing System (GPBS) not only for receiving payments for Apps (and other digital products like audio, video, games) distributed/sold through the Google Play Store but also for certain in-app purchases.
- Further, app developers cannot, within an app, provide users with a direct link to a webpage containing an alternative payment method or use language that encourages a user to purchase the digital item outside of the app (anti-steering provisions).
- If the app developers do not comply with Google’s policy of using GPBS, they are not permitted to list their apps on the Play Store.
- Thus, they would lose out the vast pool of potential customers in the form of Android users.
- Making access to the Play Store dependent on mandatory usage of GPBS for paid apps and in-app purchases is one sided and arbitrary and devoid of any legitimate business interest.
- The app developers are left bereft of the inherent choice to use payment processor of their liking from the open market.
- The CCI has also examined the allegations of exclusion of rival UPI apps as effective payment options on Play Store.
- Google is found to be following discriminatory practices by not using GPBS for its own applications i.e., YouTube. This also amount to imposition of discriminatory conditions as well as pricing as YouTube is not paying the service fee as being imposed on other apps covered in the GPBS requirements.
- Mandatory imposition of GPBS disturbs innovation incentives and the ability of both the payment processors as well as app developers to undertake technical development and innovate and thus, tantamount to limiting technical development in the market for in-app payment processing services.
- Hence, Google was found to violate various provisions of the Competition Act, 2002.
About competition commission of India:
- Nodal: Ministry of corporate affairs
- Competition Commission of India (CCI) is a statutory body of the Government of India responsible for enforcing the Competition Act, 2002.
- Competition Commission of India aims to establish a robust competitive environment.
- Through proactive engagement with all stakeholders, including consumers, industry, government and international jurisdictions.
- By being a knowledge intensive organization with high competence level.
- Through professionalism, transparency, resolve and wisdom in enforcement.
Composition of CCI:
- The Commission consists of one Chairperson and six Members.
- The commission is a quasi-judicial body .
- Eligibility of members: The Chairperson and every other Member shall be a person of ability, integrity and standing and who, has been, or is qualified to be a judge of a High Court, or, has special knowledge of, and professional experience of not less than fifteen years in international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs, administration or in any other matter which, in the opinion of the Central Government, may be useful to the Commission.
