Recently, Alphabet Inc., the parent company of Google, was hit with a staggering fine of Rs. 936.44 crores by the Competition Commission of India (CCI) for the alleged misuse of its dominant market position. This decision was prompted by an investigation conducted following consumer complaints in 2019 about Android-based smartphones.
The Problem: Google’s Unfair Business Practices
The crux of the issue lies with two particular contractual agreements – the Mobile Application Distribution Agreement (MADA) and the Anti-Fragmentation Agreement (AFA) – between Google and the Original Equipment Manufacturers (OEMs) of Android OS.
Google stipulated a mandatory pre-installation of the entire Google Mobile Suite (GMS), which comprises applications such as Google Search, Google Chrome, YouTube, Play Store, and Google Maps, in MADA. However, no option was provided to uninstall these applications.
Consumers and device manufacturers opined that this move imposed unjust conditions on them and led to a violation of Section 4 of the Competition Act. This particular section pertains to the abuse of dominant market position.
Insights into the Competition Commission of India (CCI)
Established in March 2009, the Competition Commission of India (CCI) is a statutory body appointed by the Government of India. Its primary role involves enforcing the Competition Act, 2002, which replaced the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) on the Raghavan committee’s recommendation.
Comprising one Chairperson and six Members, the CCI operates as a quasi-judicial body. It provides opinions to statutory authorities and handles various cases. To serve on this commission, an individual should be of unquestionable integrity and reputation and either qualify to be a High Court judge or have over 15 years of professional experience in fields like international trade, economics, business, commerce, law, finance, accountancy, management, industry, public affairs, and administration.
Understanding the Competition Act, 2002
The Competition Act was enacted in 2002 and later amended in 2007. The Act lays out comprehensive guidelines aligned with modern competition laws and forbids anti-competitive agreements. It regulates business combinations—such as acquisitions, control, and mergers & acquisitions—that may adversely impact competition within India.
Following the provisions of the Amendment Act, the Competition Commission of India and the Competition Appellate Tribunal were set up. However, in 2017, the Competition Appellate Tribunal (COMPAT) was replaced with the National Company Law Appellate Tribunal (NCLAT).
Google’s Dominance: A Global Concern
In more than one instance, Google’s market dominance has come under international scrutiny. As a leading internet search provider, Google enjoys significant influence over the Android mobile device ecosystem. The recent penalty imposed by the CCI highlights the need for a more level playing field, where competition thrives and consumers have freedom of choice.
As technology advances, it is critical to ensure that regulatory bodies worldwide continue to monitor dominant players like Google. This surveillance will help prevent corporates from establishing monopolies and stifle other players’ growth while ensuring consumer rights and interests are protected.
This latest event serves as a reminder that even powerful global corporations must adhere to local laws and regulations, respect fair competition practices, and prioritize consumer interests.