Antitrust

[By Anchit Nayyar] The author is a student at Symbiosis Law School, Pune. The Competition Commission of India (“CCI”) vide its prima facie order dated 16th April 2019 in the case of Umar Javed v. Google LLC has initiated investigations into potentially anti-competitive practices adopted by Google with respect to the Android Operating System(“OS”) and its suite of proprietary mobile applications. The investigation is closely modelled after similar proceedings before the European Commission (“EC”), wherein Google was fined $5.4 Billion for leveraging the dominance of Google Play Store to unfairly benefit its proprietary mobile applications, and to foreclose the development of rival mobile OSes This article seeks to analyze the multi-faceted nature of the issues before the CCI, and the consequent need to find a middle ground in antitrust enforcement in the Big Tech sector. Facts of the Case Android is an open-source mobile OS, meaning that it can be freely used as well as customized by anyone. Android’s open-source code enables third-party manufacturers to potentially customize and develop their own modified versions of Android (also knows a Forked OSes). Google also acts as an app developer and offers a suite of its proprietary apps in a bundle called Google Mobile Services (“GMS”). These apps include a total of 9 Mobile applications including the Play Store, Google Search, Chrome etc. While the Android OS can be licensed by device manufacturers by entering into simple android license agreements, to install the GMS and get access to Google’s proprietary Application Programming Interface (“APIs”), the manufacturers have to enter into two additional agreements: Mobile Application Distribution Agreement (“MADA”) which obligates the device manufacturers to pre-install the entire bundle of mobile applications in the GMS, and place them at prominent locations on the device; and Android Compatibility Commitment (“ACC”), which places restrictions on the extent to which device manufacturers can customize the Android OS. Challenging these two agreements, it was alleged that by way of tying certain Google applications which are considered irreplaceable (e.g. Play Store) with other applications for which reasonable alternatives exist (e.g. Play Music, Google Search etc.), Google is preventing the development of rival mobile applications. Further, it was alleged that by imposing the ACC restrictions, Google is unfairly reducing the incentives of third-party developers to make their own modified Android Forks, thereby restricting innovation in the market. Google’s Counter-Arguments Google argued that the restrictions and obligations imposed under the two agreements did not cause foreclosure in the market and were not anti-competitive. Some of its main submissions were as follows: The device manufacturers are not obligated to sign the two agreements to license the Android OS, which remains open-sourced; The pre-installation obligations were limited in scope and the device manufacturers were free to pre-install other rival applications as well; The end-users remain free to install any other mobile applications on their phones, and can easily move or disable the pre-installed apps; The restrictions imposed in ACC were justified by the fact that if companies make modifications to the source code beyond a certain extent, it could create incompatibilities with apps developed for Android, making it less attractive for both the app developers and the users. CCI’s  Observations The CCI defined the primary relevant market as the “Market for licensable smart mobile device operating systems in India”, thereby distinguishing Android from other non-licensable OSes like Apple’s iOS. Thereafter, the CCI relied on the 80% market share held by Android in the primary relevant market to hold that it possessed a position of dominance. Further, the Commission defined two associated relevant markets i.e. the “Market for Online General Web Search” and the “Market for app stores for Android Mobile OSes” and also prima facie held that each mobile application available in the GMS would constitute separate relevant markets. On the issue of the abusive conduct, the CCI was of the prima facie opinion that Play Store is a must-have app on each Android Mobile phone, a lack of which severely hinders the device’s marketability. Thus, while Google had contended that the two agreements were not mandatory for licensing the Android OS, Play Store’s essentiality de-facto rendered the agreements compulsory for the device manufacturers. Making pre-installation of proprietary apps like the Play Store conditional upon signing the ACC thus reduced the incentives and ability of the device manufacturers to produce forked versions of Android, thereby limiting scientific and technical development in violation of Section 4(2)(b) of the Competition Act (“the Act”). Further, the CCI prima facie held that Google abused its dominant position and imposed unfair conditions on the device manufacturers in contravention of Section 4(2)(a)(i)  by making pre-installation of its must-have apps like the Play Store conditional on pre-installation of the entire GMS suite. The same also amounted to Google leveraging Play Store’s dominance to protect the competitive position of its proprietary apps in contravention of Section 4(2)(e), while also leading to a denial of market access to its competitors in violation of Section 4(2)(c) of the Act. Analysis The case against Google revolves around it leveraging the dominance of the Play Store to unfairly benefit its own proprietary apps, while also limiting the development of Android forks. This case has brought the CCI face to face with some very pertinent economic issues that will potentially shape the antitrust enforcement in India’s digital economy. Pre-Installation Bias v. Multi-Homing The CCI was of the opinion that Google is leveraging the dominance of Play Store to unfairly benefit its other proprietary apps by making pre-installation of the entire suite of GMS apps in order to get access to Play Store. This issue, however, requires a multi-faceted consideration. Firstly, the finding is based on the presumption of the existence of a pre-installation bias, wherein users who find apps pre-installed on their devices are likely to “stick to them”. Similar findings were made by the EC in its case against Android, wherein it found that such practices adopted by Google reduced the incentives of manufacturers to pre-install competing apps. Further, such practices ensure an inherent