A big blow to the search giant in the crucial foreign country where it has put billions of dollars over the last decade came on Thursday when India’s competition commission penalized Google $161.9 million for anti-competitive actions relating to mobile phones running Android in “various marketplaces.”
Three and a half years ago, following a complaint from two junior associates and a law school student, the Competition Commission of India began investigating it. In a press release, the Commission stated that Google’s requirement that device manufacturers preinstall its entire Google Mobile Suite and mandate prominent placement of those apps “amounts to imposition of an unfair condition on the device manufacturers” and was thus “in contravention of the provisions of Section 4(2)(a)(i) of the Competition Act, 2002.”
According to the Competition Commission, Google’s business model depends on attracting as many customers as possible so that the company may utilize the information from its users to woo advertisers for its Search, Chrome, and other services. Google also has a “competitive advantage,” as deemed by the Competition Commission, since it negotiates contracts requiring device makers to preinstall applications and services.
Google’s attorneys used Apple’s limited resources as evidence throughout the investigation. The Commission found that Google’s business is driven by “the ultimate intent of increasing users on its platforms so that they interact with its revenue earning service, i.e., an online search which directly affects the sale of online advertising services by it.” In contrast, Apple’s business is primarily based on a “vertically integrated smart device ecosystem” that focuses on the sale of high-end smart devices with state-of-the-art software components.
By an anti-trust panel, Google was accused of abusing its dominant position in licensing its smart mobile operating system, Android app store market, generic web search services, and non-operating system, particularly mobile internet browsers and video content hosting platforms.
The Commission disregarded Google’s claim that Apple would be harder to compete with because of restrictions on the company’s ability to engage in certain types of business. In contrast to Apple, whose focus is on bringing all of its products together under a single umbrella ecosystem, Google’s goal is to expand the number of people who utilize its revenue-generating services like Search.
Contractual limitations Google put on Android device manufacturers also contributed to the $161.9 million penalties.
Why Actually India Fines Google?
Android is a free and open-source operating system distributed by Tech Giant. Therefore, in principle, a phone manufacturer might develop its operating system and include it in its products. The Competition Commission of India claims that it forced phone manufacturers to sign agreements restricting their freedom to use versions of Android before allowing its applications to be preinstalled on the handsets.
The search engine company was fined $161.9 million and told by regulators to alter certain business tactics.
Google must end certain revenue-sharing contracts it has with mobile device manufacturers. It was determined that the agreements hindered competition from other search engines. Furthermore, the Competition Commission of India mandated that it allow customers to remove preloaded applications and alter the default search engine on Android smartphones.
The Commission issued a cease and desist order against Tech Giant to prevent the company from “engaging in anti-competitive practices.” These practices include providing financial or other incentives for exclusivity, requiring manufacturers to preinstall apps, and denying access to Play Services APIs.
Governments worldwide are looking at Google more closely because they are concerned that its global reach may hurt smaller businesses in their area. Google’s appeal of the EU’s record $4.3 billion punishment for abusing Android’s dominant position to stifle competition was rejected. The new German law that restricts the activities of multinational corporations also applies to them.