Daybreak - The curious case of India's antitrust investigation against Google

Episode Date: March 4, 2024

On Friday, Google removed a bunch of popular apps like Bharat Matrimony, Shaadi.com,Naukri.com  and even some dating apps like Truly Madly and Quack Quack from its Playstore. The tech giant said it was because these apps were not compliant with its billing policy.The impact was immediately felt in the stock market. For example, shares of Info Edge that owns Naukri and 99 acres fell 3% on Saturday These apps were scrambling and somehow at the end of the day, the government intervened and we heard news that they have been reinstated.The tech giant wanted to enforce its new billing policy. Google said in a blogpost on Friday that out of the developers using Google Play, only ten Indian developers did not to pay for the services and how allowing a few to receive different treatment creates an unfair environment and disadvantages other apps and games.Now while all this comes after a Supreme Court ruling that had earlier refused to stop Google from removing non compliant apps from the Playstore, here’s the irony: Google itself has been found guilty of adopting anti-competitive or monopolistic practices in India.Tune in.

Hi, this is Rohan Dharma Kumar. If you've heard any of the Ken's podcasts, you've probably heard me, my interruptions, my analogies, and my contrarian takes on most topics. And you might rightly be wondering why am I interrupting this episode too. It's for a special announcement. For the last few months, I and Sita Ramon Ganeshan, my colleague and the Ken's deputy editor, have been working on an ambitious new podcast. It's called Intermission.

We want to tell the secret sauce stories of India's greatest companies. Stories of how they were born, how they fought to survive, how they build their organizations and culture, how they manage to innovate and thrive over decades, and most importantly, how they're poised today. To do that, Sita and I have been reading books, poring over reports, going through financial statements, digging up archives, and talking to dozens of people. And if that wasn't enough, we also decided to throw in video into the mix. Yes, you heard that right. Intermission has also had to find its footing in the world of multi-camera shoots in professional studios, laborious editing, and extensive post-production. Sita and I are still reeling from the intensity of our first studio recording.

Intermission launches on March 23rd. To get alert, as soon as we release our first video. episode, please follow intermission on Spotify and Apple Podcast or subscribe to the Ken's YouTube channel. You can find all of the links at the ken.com slash I am. With that, back to your episode. On Friday, Google removed a bunch of popular apps like Bharat Matrimony, Shadi.com, nocri.com and even some dating apps like Truly Madly and Quack Quack from its play store. The tech giant said that it was. because these apps were not compliant with its billing policy.

The impact was immediately felt in the stock market. For example, the shares of Info Edge that owns Nocri and 99 acres fell by 3% on Saturday. Now, of course, all this sent these apps crambling and somehow at the end of the day on Saturday, we heard news that some of these apps had been reinstated. But why did Google do this? Well, the tech giant wanted to enforce its'noburn. new billing policy. Google said in a blog post on Friday that out of the developers using Google Play, only 10 Indian developers had not paid for the services. But more than 200,000 others did.

And then it went on to say how allowing only 10 developers to receive different treatment creates an unfair environment and disadvantages for the other apps and games. Now, while all this comes after Supreme Court ruling that had earlier refused to stop Google from removing non-compliant apps from the Play Store, here is the irony. Google itself has been found guilty of adopting anti-competitive or monopolistic practices in India. So today, I will take you back to revisit one that has Google fighting in India's top court. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Dhas.

Sharma, and I don't chase the news cycle. Instead, thrice a week on Mondays, Wednesdays and Fridays, I will come to you with one business story that is worth understanding and worth your time. Today is Monday, the 4th of March. In 2022, the Competition Commission of India or CCI had found Google guilty in two antitrust cases. The tech baymit was asked to pay close to $300 million in fines, and more than half of this penalty was for exploiting. its dominant position in the Android market, which happens to power 97% of smartphones in India. It was also asked to pay another fine of over $100 million for some of its play store policies. Now, I don't think I even need to say this, but Google is literally a word for us.

That is the level of dominance that it has over the market. So it comes as no surprise why it has been facing fines totaling billions of dollars for abusing its dominance, not just in the Indian market, but around the world, which is why the antitrust investigation in India did not really come as a surprise for Google. In the case related to its alleged dominance in the Android market, Google decided to approach the National Company Law Appellate Tribunal or NCLAT. It asked for interim relief from the CCI order, alleging that the CCI investigators had copied part of the European Commission's landmark 2018 ruling against it,

which was in a similar antitrust matter. Now, here is where it gets a bit muddled up, but I will try to keep it as simple as possible for you. At first, the NCLAT refused Google's plea. So it went to the Supreme Court. The top court also declined. And then around June last year, in what came as quite a boost of confidence for the tech giant,

NCLAT changed its mind. It decided to set aside four of the 10 directives that the CCI had asked Google to comply with. Which is why a few weeks later, Google decided to approach the top court again asking for the remaining directives to be also withdrawn. Now, while we're yet to hear what comes out of that, last year in December,

Google lost a very important antitrust case against it, filed by a gaming company called Epic. And this could also impact the ongoing case here in India. So now, let us try to understand how India is for following a global precedent when it comes to antitrust cases against Big Tech. In India, the CCI has a total of four cases against Google. Out of these, the CCI has found Google guilty in two. But what was the case that forced Google to fight back?

In fact, it went on to approach the country's top court not once but twice. It has got to do with Google abusing its dominance in the mobile operating systems market. Android, the most common OS in smartphones, was acquired by Google way back in 2005. In India, 95% of smartphones used are powered by Google's Android OS. It is a big market for the tech giant. To understand why CCI thinks Google is adopting anti-competitive practices in this case, we have to understand how Android works. Android is an open source operating system,

which basically means that developers can modify it and build on it since it is publicly accessible. Now, most smartphone and tablet manufacturers which use the Android operating system combine it with a bunch of Google's proprietary applications and services, which are known as Google Mobile Services or GMS. This includes running apps like Gmail, Google Maps, YouTube, etc. So, a smartphone or tablet manufacturer, say like Samsung or Xiaomi or Vivo, has two options. The first one is they operate without the GMS, which means that their Android device will not include any apps like Google Maps, Gmail or YouTube.

And the other option is that they use the GMS. But for this, they have to enter into two additional agreements with Google. the mobile distribution agreement or MADA and the anti-fragmentation agreement or AFA. According to Google, the reason for this is that since it is providing its operating system free of cost, smartphone or tablet manufacturers will have to agree to certain conditions if they also want to use GMS. And what are these conditions? That smartphone makers have to carry Google's search widget, the Chrome browser and an entire

suite of applications. And here's the catch. They have to do it without offering users the ability to uninstall them. The CCI, in its investigation, found these conditions unlawful or anti-competitive. Plus, the CCI also said that because of the compulsory pre-instillation of Google Suite, which includes Google Play Store, consumers did not have the option of downloading apps outside of the Play Store. So the CCI found Google guilty of anti-competitive practices and fined it for nearly $162 million in this case.

This fine was paid by the tech giant. In its ruling, the CCI also said that Google's licensing of its Play Store shall not be linked with the requirement of pre-installing Google search services, the Chrome browser, YouTube or any other Google applications. But here is what happened after that. The CCI directives that the NCLAD decided to put on hold in June were the same ones that would have forced Google to allow uninstalling of its pre-installed apps on Android devices. The directive that asked the tech giant to allow individual app store developers to distribute

their app store via Google Play Store was also quashed. And now, Google is actually contending that it has not abused the market position that it has and should not be liable to pay the rest of all the fines. This information is based on a report by Reuters. In fact, in a court filing, it also announced plans to present its case and demonstrate how Android benefited users and developers. But as you probably know, governments around the world, dealing with tech giants are constantly learning from each other.

In Europe, for example, Google was fined for putting unlawful restrictions on Android mobile device makers and was asked to pay them more than $4 billion in fine in that case. Of course, Google challenged that ruling, but that is not the point. Just how governments around the world are waking up to the monopoly of tech giants like Google, India is doing the same. Which is why many experts believe that Google's loss against Epic in the US may not bode well for its ongoing case in India. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform.

What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters, subscriber-only apps and podcast extras. Head to the ken.com and click on the red subscribe button on the top of the website. I am Snigda Sharma, your host, and today's episode was edited by my colleague Rajiv Sien. Thank you.