Imposition of unfair trade practices by Google Play Store for favouring GPay: CCI orders investigation

After anonyms informants came forward, the Competition Commission of India (CCI) ordered a Director General (DG) probe. The investigation concerns the allegations made by the informants that Google by favouring Google Pay app over other payment applications. It does so via the dominance and utmost control over the Play Store and the Android Operating System.

The order was passed by the CCI u/s 26(1) of the Competition Act, 2002. The informants filed the application claiming that Google abuses its position of dominance in the mobile operating system related markets which amounts to a contravention of provisions stated in S.4 of the Act. The informants explained four different kinds of markets namely; Licensable Smart Mobile OS, App stores for the Android Mobile OS, Online Video Hosting Platform (OVHP) and Online General Web Search Service. The informers then alleged that Google is involved in various anti-competitive practices either via the markets they are dominant in or through separate markets. It aims to strengthen its dominant position in Online General Web Search Services and OVHP through YouTube. To support this point, it further alleged that Google, with the following acts violates S.4 read with S.32 of the Act:

Google makes it mandatory for smartphones and tablet manufacturers to pre-install Google’s applications and services in order to access Google Mobile Services for all the smartphones manufactured, sold or even exported to India. This act prevents the development and market access to compete for the mobile apps and/or services.
Google bundles its certain applications and services like Chrome, YouTube etc. distributed on Android devices with some of its other apps, services and/or applications programming interfaces of Google. Illegally prevents the development and market access of the rival apps and services.

According to the informants, “Google’s app store, the Play Store, accounts for more than 90% of apps downloaded on Android devices.” Using this dominance, it abused its position by:

  • Providing unfair privilege to GPay by placing it conspicuously on the Play Store, both on OS and Android led smartphones;
  • Messing up with the featured app lists to place GPay in the category;
  • Influencing the search advertisements’ algorithm on the Play Store to favour GPay;
  • Pre-installing GPay on Android smartphones;

Google made four major submissions to retaliate these allegations and some of them include:

  1. Android is open-source which does not make it a requirement for the manufacturers to sign a Mobile Application Distribution Agreement (MADA) or any other agreement. Should the manufacturers choose to preinstall Google mobile apps, the MADA simply gives manufacturers permission to preinstall a suite of Google mobile apps and services referred to as Google Mobile Services (GMS).
  2. The obligation to pre-install has a limited scope. Google emphasised that its pre-installed app icons take minimal screen space. Manufacturers can use the rest of the space to pre-install and even advertise their own or any other third-party apps. Google also submitted that the MADA conditions about pre-installation are not exclusive or prohibiting in nature. The MADA leaves it at the manufacturers’ discretion to pre-install and advertise rival apps at a similar or even a superior placement.
  3. Android users have significant freedom to personalise their handsets and install apps which Google’s rival apps. They can disable the pre-installed apps, quickly and very easily. This will make the apps disappear from the screen along with freeing up the memory and clearing up space from the device’s memory. It lets the user to restore the app and factory reset their devices.

Another matter raised was the compulsion of paying through GPay while making in-app purchases from the Google Play Store. The CCI took prima facie view that this practice prohibits the app developers from selecting a payment processing portal of their choice. Considering that Google charges a commission of 15%-30% for all the purchases.  According to the informants, other portals charge significantly lower than GPay. Additionally, Google has access to the user’s personal data which it can use to enhance the performance of the apps. However, the rival companies do not have access to such data which gives Google a competitive edge over its counterparts.

It was held that understanding the nature and the contractual arrangements whilst understanding whether they hinder the process of competition in the market for the other UPI payment portals is appropriate. “Although, Google has contended that such arrangements are optional, its market position in different streams of smart mobile device ecosystem cannot be discounted in the relationship with OEMs.”- CCI held. This matter will be further probed by the DG. Allegations about the manipulation of the search results by Google favouring GPay and placement of GPay made conspicuously on the Play Store were dismissed and not asked for further probe due to lack of evidence presented by the informants.

Google had challenged the position of the anonymous informant. It cited the recent decision of the NCLAT in the case of Samir Aggarwal vs CCI which prohibited informants to come forwards unless they have been personally harmed, legally or financially.

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However, the CCI, while dealing with the informant’s anonymity held that the informant need not necessarily an aggrieved party to file a case before the CCI. The Act does not specify any such requirement, explicitly or implicitly.

“Further, it is because of the inquisitorial scheme of the Act, that the Commission in appropriate cases, defends its orders in higher forums, regardless of the fact as to who brought such case before it, which is not a normal feature in adversarial proceedings.”

The CCI has directed the DG to complete the investigation within 60 days.

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