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The Google-Android Antitrust Dilemma

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[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

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Revisiting the Competition Regulations for Big Data Based Economy

[Parth Tyagi and Achyutam S. Bhatnagar] The authors are third year students of the National Law Institute University, Bhopal and National Law University, Odisha respectively. Introduction In the month of April, social media giant Facebook invested over 40,000 crores, for a 9.9% stake in Jio Platforms, a unit of Reliance Industries[i]. The transaction brewed up the concerns for the possible abuse of data at the hand of these behemoths. The transaction stirred up the debate upon the lack of authority of the Competition Commission of India (“CCI”) in tackling big data-driven mergers. The article aims at addressing the inefficiencies in the current Competition act, by first defining what big data is, and how can big data give a competitive edge, following up with a discussion on the lacunas in the current merger standards. The last part of the article will lay out the different ways in which the current regulatory standards can be improved so as to cover big data-driven mergers. Big Data and its competitive advantage Big data is generally defined as ‘high-volume, high-velocity and high-variety information assets that determine cost-effective, innovative forms of information processing for enhanced insight and decision-making’.[ii] The potential misuse of data arises from such algorithmic use of datasets which the competitors in the market would not be able to duplicate. This leads to exclusivity of data, which is used to specifically target customers, who are more likely to use the company’s product/services. A perfect example of the possible abuse of the data obtained post-merger is the Google-Double Click[iii]merger. Regulatory gaps regarding data-driven mergers Section 5 and 6 of the Competition Act 2002 (“the Act”) read together, are the regulating provisions of combinations in the market. While Section 5 of the Act defines combinations, Section 6 of the Act provides for regulations of such combinations. However, Section 6 is applicable only to combinations in Section 5 of the Act, which means that CCI does not have the regulatory powers to review all kinds of combinations. Section 5 prescribes certain thresholds in terms of assets and turnovers to term certain mergers and acquisitions as combinations. The primary disability comes to light when data-driven mergers are on the rise in India. This is because big data is not considered as an asset in India, and digital companies tend not to have high turnover due to the provision of free services[iv]thus the scrutiny by the regulator is bypassed. The turnover based exemption is also a threat to privacy[v]. The acquisition of WhatsApp by Facebook is a good example[vi], wherein despite having a worldwide customer base, the acquisition eluded the CCI, while the acquisition met jurisdictional requirements in other countries and was reviewed.[vii] The traditional tools of analysis while have worked out so far[viii], but the digital economy is dynamic and a company with a huge data backing can effectively prevent the entry of new entrants in the market. Way forward Considering data as an asset Big Data in the present markets is undeniably an asset and one of the main reasons of investments, mergers and acquisitions. The future lies in data valuation programmes that can be performed which provide the framework for businesses to monetize, measure and manage information as an actual asset[ix] or through the application of infonomics.[x] 2. Introduction of alternate parameters The idea of novel parameters such as the value of transaction or deal size, which is also under consideration by CCI.[xi] The same was a key observation in the report[xii] of the Competition Law Review Committee. Additionally, network effects and control over consumers’ data prima facie appear to be sensible parameters.[xiii] The concept of big data also involves deliberations over privacy concerns, and what the authors view as a whole other debate. Competition concerns are related to privacy, but at the same time, the regulation of both cannot be a concern for a single body. Privacy in the competitive assessment muddles the goal of competition enforcement.[xiv] Adopting foreign competition regulations to tackle the Big Data-driven mergers The issue of tackling big data-driven mergers has plagued numerous countries and in response, there have been certain regulatory changes made by some countries. This section discusses the new regulatory norms for curbing big data-driven mergers adopted/proposed in different countries, which can be used to change the current regulatory standards in India. Redefining the relevant market or lowering the notification threshold The German federal cartel office, the national completion regulator of Germany, in taking a step towards combating the data-driven mergers,[xv] redefined the meaning of relevant market under section 18(2a) of the German Competition Act. The new provision tackles the free services offered by the digital platforms wherein it states that “the assumption of a market shall not be invalidated by the fact that a good or service is provided free of charge”.[xvi] The competition regulator also added a new lower threshold for notification of merger under section 35(1)(a) of the Act. This resulted in the competition regulator being notified about the takeover of small companies by large platforms. Shifting the burden of notifying the Competition Regulator on the parties The competition act of Singapore under Section 55A(3), places the burden of notifying the competition regulator of a merger on the parties. The parties are to assess whether their merger has the potential of disrupting the competition in the future, and on the basis of this, they may or may not notify the competition regulator. If the parties do not notify the competition regulator of their merger, and subsequently the merger hampers the competition, then the competition regulator has the authority to take the appropriate action in order to restore market contestability. The provision invalidated the Grab-Uber[xvii] merger, wherein the merged entity had the potential of controlling 90% app-based taxi market. Applying the Public Interest Test A report by the House of Lords communications select committee[xviii]in 2019, recommended the adoption of a public interest test for determining the validity of the data-driven mergers. The committee suggested that such a test should be included in the