Penalty for Unfair Business Practices

Google Unfair Business Practices

Google Unfair Business Practices investigation was ordered by CCI in 2019 following complaints by consumers of Android-based smartphones in the country.

Google India was found guilty of Unfair Business Practices, stifling competition and innovation in the market to maintain its dominance in search, music, browser, app library and other key services.

Unfair Business Practices Allegations

• Allegations: The complaint about unfair practices were based on two agreements —Mobile Application Distribution Agreement (MADA) and Anti Fragmentation Agreement (AFA).
  • Google had mandated pre-installation of entire Google Mobile Suite (GMS) by OEMs under MADA, which could not be uninstalled.
  • This action of Google amounted to imposition of unfair condition on the device manufacturers and thereby violated Section 4 of the competition Act.
  • Section 4 of the Competition Act is related to abuse of dominant position.
• Misuse of dominant position by Google:
  • Search engine: Google illegally strengthened its position in the online search market resulting in denial of market access for competing search apps.
  • Browser: Google has leveraged its position in app store market to promote and protect its Google Chrome App.
  • Video hosting: Google has leveraged its position in play store market to assert its dominance in Online Video Hosting Platforms (OVHPs) market through YouTube.
• Mobile Application Distribution Agreement (MADA):
  • Google’s Mobile Applications Distribution Agreement is a license requirement for access to any of Google’s Android apps.
• Anti Fragmentation Agreement (AFA):
  • It is an android compatibility commitment contract in licensing hardware producers to install PlayStore app and Google search engine on their devices.

Unfair Business Practices News

• Reasons fort penalty: Penalty was imposed on Google for abusing its dominant position in multiple markets in the Android mobile device ecosystem.
• Besides the fine, CCI has directed Google to cease and desist from unfair business practices. It has been asked to modify its conduct within a defined timeline.
• Android:
  • Android is an open-source, mobile operating system used by Original Equipment Manufacturers (OEMs) of smartphones and tablets.

Unfair Business Practices and Competition Commission of India (CCI)

• CCI is a statutory body under Ministry of Corporate Affairs and is responsible for enforcing the Competition Act, 2002.
• The goal of CCI is to promote competition and stop activities that have an adverse effect on competition in India.
• The CCI also prohibits anti-competitive agreements, abuse of dominant position by enterprises and regulates combinations (acquisition, acquiring of control and Merger and acquisition), that can adversely affect competition.
• Objectives:
  • Making markets work for the benefit and welfare of consumers.
  • Promote fair and healthy competition in economic activities in the country for faster and inclusive growth and development.
  • Implement competition policies to ensure most efficient utilization of economic resources.
  • Promote competition advocacy and spread the information on benefits of competition among all stakeholders.
  • The commission is also required to give an opinion on competition issues on a business deal.

Unfair Business Practices: The Competition Act, 2002

• The act governs commercial competition in India. The act replaced the erstwhile Monopolies and Restrictive Trade Practices Act, 1969.
• The act enforces competition policy and prevents and punishes anti-competitive business practices by firms and unnecessary Government interference in the market.

Unfair Business Practices: Recommendations of CCI:

• Licensing of Play Store (including Google Play Services) to OEMs shall not be mandated with the pre-installing Google search services
• Google cannot deny access to its Play Services APIs to disadvantage OEMs, app developers and its existing or potential competitors.
• Google must not restrict uninstalling of its pre-installed apps by the users
• Google must allow users during initial device setup to choose the search engine of their choice

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