Google playing ‘smart’, but not ‘fair’?

Google has come face to face with its fourth regulatory challenge in India, this time in the smart TV market. Meanwhile, numerous startup developers led by Paytm are planning to join forces to combat its ‘anticompetitive practices’ vis-a-vis its app store. It’s time for Google to play a facilitative role in building a competitive market ecosystem, rather than suppressing it.

Google has been accused of exploiting its dominant share in the smart TV operating system. As per the allegations, manufacturers of television using operating system of Google have to agree to terms and conditions that prohibit them from manufacturing devices on any forked version of android. This implies that manufacturers using Android TV would also have to manufacture other devices based on Google platform.

The allegations have been imposed by Kshitiz Arya and Purushottam Anand, two antitrust lawyers, in a complaint filed with the Competition Commission of India (CCI). They conclude that Google is engaging in anti-competitive practices by using Android’s dominance, which would prevent competitors such as Amazon Fire TV OS from gaining share in the smart TV market. As per statcounter data, share of Google’s Android in the Indian smartphone market between September 2019 and September 2020 is at 95.85%.

Even prior to this, Google has been accused of practicing unfair trade in India. CCI found that certain conditions imposed by the company on India’s manufacturers are unfair practices. In particular, Google made it mandatory for manufacturers to preinstall certain Google’s proprietary apps in the device. The CCI said, “Google reduced the ability and incentive of device manufacturers to develop and sell devices operated on alternate versions of Android.” Also, in February 2018, the CCI imposed a penalty of Rs. 136 crore on Google for abusing its market position and involving in practices like search bias and manipulation.

The search engine giant has also been accused of unfair promotion of its app. In February, 2020, it was alleged that Google was unfairly promoting its Google Pay app, by prominently showing it on its app store and gaining an unfair advantage over its competitors. Furthermore, Indian start-ups are also seeking an alternative play store in order to combat the monopolies of Google and Apple.

This came up after Google introduced a new billing system for apps with ‘in-app purchases’, with the purpose of earning a 30% commission. However its enforcement has been postponed to April 2022. In its defence, Google has also stated that the app developers have other options to sell their subscriptions as well.

However, the Internet and Mobile Association of India (IAMAI) said in a release that Google has control over many layers between customers and their service providers as more than 90% use Android phones. Indian startups feel that the tech giant is misusing its large market share to earn maximum profit. Thus, they are planning to form an association of app developers to advocate their causes.

In a notable move, Google also removed Paytm, India’s largest fintech app for hours before reinstalling it, saying that the latter’s UPI cashback campaign violated its anti-gambling policies. Paytm CEO Vijay Shekhar Sharma has termed the move arbitrary and biased, and even launched its own mini app store.

In other countries also, the technology company faces similar allegations of unfair trade practices. In US, Google is expected to face a lawsuit by the US Justice department. These include depriving its rivals of data on users and their preferences. Also, it is said to favour products like YouTube and eBay in the search function.

In the European Union, Google has been fined three times since 2017. It was charged a US$ 2.7 billion fine for involving in anti-competitive search engine practices in 2017. Later on, the EU charged a fine of US$ 5 billion to practice trade activities involving pre install requirement of Google’s products in the devices. Also, a fine of US$ 1.69 billion was imposed on Google in March 2019 for restricting its competitors’ ads on the AdSense service.

The share of Google in search engines in the European Union member countries varies between 92 to 93% and in some cases it’s over 95%. Its share in the US search engine market is 86.86%.

As per the allegations, Google is misusing its dominant position to gain a monopoly in markets. Less competition in a market drives up the prices, halters growth of new players and also reduces innovation, which is key to market evolution. Thus, it is obligatory for governments to have a watchful eye on tech mega giants. With Indian startups now coming together, this may just be a tipping point for Google in one of its most lucrative markets. Google needs to play an enabling role towards fuelling a dynamic, competitive and entrepreneurially driven market, which was the basis of its own genesis over two decades ago.