Tech Giant Penalized for Unfair Practices with Pre-Installed Apps; Anti-Competitive Conduct Confirmed.

The Commission determined that the Appellant abused its dominant position by imposing unfair conditions on OEMs through the pre-installation of the GMS Suite, breaching Section 4 of the Competition Act, 2002. The Commission found the Appellant's conduct anti-competitive, limiting technical development and denying market access to competing apps. The investigation by the Director General was deemed fair, and the absence of a Judicial Member did not invalidate the Commission's order. The penalty based on relevant turnover was upheld, with the Commission's order sustained except for the deletion of specific directions in paragraph 617. The Appellant was not granted additional relief beyond this modification.

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Issues Involved:

1. Whether for proving abuse of dominant position under Section 4 of the Competition Act, 2002 any 'effect analysis' of anti-competitive conduct is required to be doneRs. And if yes; what is the test to be employedRs.
2. Whether the order of the Commission can be said to be replete with confirmation biasRs.
3. Whether pre-installation of entire GMS Suite amounts to imposing of unfair condition on OEMs which is an abuse of dominant position by the Appellant resulting in breach of Section 4(2)(a)(i) and 4(2)(d)Rs.
4. Whether the Appellants by making pre-installation of GMS Suite conditioned upon signing of AFA/ACC for all Android Device Manufacturers (OEMs) has reduced the ability and incentive of the OEMs to develop and sell devices operating on alternative versions of Android i.e., Android Fork and thereby limited technical and scientific development which is breach of the provisions of Section 4(2)(b)(ii) of the ActRs.
5. Whether the Appellant has perpetuated its dominant position in the Online Search Market resulting in denial of market access for competing Search Apps in breach of Section 4(2)(c) of the ActRs.
6. Whether Appellant has leveraged its dominant position in Play Store to protect its dominant position in Online General Search in breach of Section 4(2)(e) of the ActRs.
7. Whether Appellant has abused its dominant position by tying up of Google Chrome App with Play Store and thereby violated provisions of Section 4(2)(e) of the ActRs.
8. Whether Appellant has abused its dominant position by tying up of YouTube App with Play Store and hereby violated provisions of Section 4(2)(e) of the ActRs.
9. Whether the investigation conducted by the Director General was in violation of Principles of Natural JusticeRs.
10. Whether the investigation conducted by the Director General is vitiated due to DG framing leading questions to elicit informationRs.
11. Whether order of Commission is vitiated since the Commission did not have any Judicial MemberRs.
12. Whether the order passed by the Commission in exercise of its power under Section 27(a) is beyond the findings recorded by the Commission and is not in accordance with lawRs.
13. Whether the penalty imposed on the Appellants by the Commission in exercise of its power under Section 27(b) was not based on relevant turnover of the Appellants, disproportionate and excessiveRs.
14. Relief if any to which the Appellants are entitledRs.

Summary:

Issue No.1:
For proving abuse of dominance under Section 4, effect analysis is required to be done and the test to be employed in the effect analysis is whether the abusive conduct is anti-competitive or not.

Issue No. 2:
The Commission proceeded to consider the materials on the record and submissions of the parties with respect to each of the market and recorded findings and conclusions after considering the evidence on record. Hence, the order of the Commission is not replete with confirmation bias.

Issue No.3 and 3a:
(i) Pre-installation of entire GMS Suite amounts to imposing of unfair condition on OEMs which is an abuse of dominant position by the Appellants resulting in breach of Section 4(2)(a)(i) and 4(2)(d).
(ii) The Commission while returning its finding on breach of Section 4(2)(a)(i) and 4(2)(d) has considered the evidence on record and has returned finding that the conduct of the Appellant harms the competition.

Issue No.4 and 4a:
(i) The Appellant by making pre-installation of GMS suite conditional to signing of AFA/ACC for all Android devices manufacturers, has reduced the ability and incentive of devices manufacturers to develop and sell self-device operating or alternative version of Android and Android Forks and thereby limited technical and scientific development, which is breach of provisions of Section 4(2)(b)(ii) of the Act.
(ii) The Commission while returning its finding has considered the evidence on record in respect of Section 4(2)(b)(ii) and has also returned finding on anti-competitive conduct of the Appellant.

Issue No.5 and 5a:
(i) The Appellant has perpetuated its dominant position in the Online Search Market resulting in denial of market access for competing Search Apps in breach of Section 4(2)(c) of the Act.
(ii) The Commission while returning its finding on breach of Section 4(2)(c) has considered the evidence on record and has also recorded finding regarding Appellant's conduct being anti-competitive.

Issue Nos. 6, 6a, 7, 7a, 8 and 8a:
(i) Issue No.6 and 6a: Appellant has leveraged its dominant position in Play Store to protect its dominant position in Online General Search in breach of Section 4(2)(e) of the Act. Commission while returning its finding on breach of Section 4(2)(e) in reference of above has considered the evidence on record and has also returned finding regarding the Appellants conduct being anti-competitive.
(ii) Issue No.7 and 7a: Appellant has abused its dominant position by tying up of Google Chrome App with Play Store and thereby violated provisions of Section 4(2)(e) of the Act. Commission while returning its finding on breach of Section 4(2)(e) in reference of above has considered the evidence on record and has also returned finding regarding the Appellants conduct being anti-competitive.
(iii) Issue No.8 and 8a: Appellant has abused its dominant position by tying up of YouTube App with Play Store and thereby violated provisions of Section 4(2)(e) of the Act. Commission while returning its finding on breach of Section 4(2)(e) in reference of above has considered the evidence on record and has also returned finding regarding the Appellants conduct being anti-competitive.

Issue No.9 and 10:
(i) Issue No.9: Investigation conducted by the Director General did not violate the principle of natural justice.
(ii) Issue No.10: Investigation conducted by the Director General cannot be said to be vitiated due to the Director General framing leading questions to elicit information.

Issue No. 11:
The impugned order by the Commission is not vitiated on the ground that the Commission did not consist of a Judicial Member.

Issue No. 12:
In view of the foregoing discussions, we direct for deletion of directions at paragraph 617.3, 617.9, 617.10 and 617.7 while upholding other directions in paragraph 617.

Issue No. 13:
While calculating the "relevant turnover", the CCI has correctly considered the sum total of revenue of various segments/heads in India arising out of the entire business of Google India's operations of Android OS based mobiles. Further, the penalty imposed is final and would not be subject to any revision upon Google furnishing any further financial details and supporting documents, as sought by CCI vide its order dated 19.9.2022.

Issue No. 14:
In view of the foregoing discussion, the impugned order of the Commission is upheld except the four directions issued in paragraph 617.3, 617.9, 617.10 and 617.7. The Appellant are thus not entitled for any other relief except for setting aside the above four directions.

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