“Back in India this week after a few years away! Super energized by the entrepreneurs, leaders, and Googlers I met in Delhi and Bangalore. Glad to join our #GoogleForIndia and #WomenWill events, spend time with teams here, and eat many excellent thalis:),” read the Instagram post of Sundar Pichai, the much celebrated CEO of Indian origin who heads the world’s largest media company Google.
The post was accompanied by Pichai’s picture with prime minister Narendra Modi in which they both were seen in a brimming smile. Pichai, who was awarded the Padma Bhushan early this month, was in New Delhi to attend his company’s flagship event ‘Google for India’ held in December where he announced a slew of new features to enhance users and marketers experience.
On Twitter, Pichai posted: “Thank you for a great meeting today PM
@narendramodi. Inspiring to see the rapid pace of technological change under your leadership. Look forward to continuing our strong partnership and supporting India’s G20 presidency to advance an open, connected internet that works for all.”
His visit came at a time when the Indian arm of his company had posted record advertising revenue of nearly Rs 25,000 crore in 2021-22, a jump of 79% from the previous year. But days later, India’s competition regulator Competition Commission of India (CCI) issued demand notices to Google India for its failure to pay within the stipulated time (60 days) penalties of Rs 2,250 crore.
In a first ever case, the watchdog on October 20 had slapped a penalty of Rs 1,337 crore and then on October 25 another penalty of Rs 936 crore on the tech major for abusing its dominant position with respect to its Android mobile system and Play Store policies respectively. The penalties are roughly 9 per cent of the company’s ad revenue in India. The regulator had also directed Google to modify its conduct within a defined timeline. The Indian regulator’s stern action against one of the most powerful companies sparked a fresh debate over the tech giant’s monopoly and its repercussions.
While app designers have welcomed this decision as it opens the door for a level playing field for them against Google, activists and industry experts aren’t that optimistic about the outcome of the CCI orders. Reasons: Firstly, Google has challenged the CCI order of Android at the National Company Law Appellate Tribunal (NCLAT) in the Android mobile case which is yet to be heard. Secondly, the tech giant has not hinted so far that it was taking any corrective measures in its policies as desired by the CCI.
The case is likely to come up for NCLAT hearing in 2023. Moreover, CCI is also looking into Google’s business conduct in the smart TV market and also its ad revenue sharing with digital news publishers. Clearly, the new year is going to be one of the most challenging years for Google in India, industry experts say.
Although Pichai has announced a slew of special features for India at its recent ‘Google for India’ event such as Multi Search feature, bilingual search pages and integration of the Files app with the Digilocker service that will help strengthen Google’s business further in 2023, the CCI penalties will continue to haunt the global giant for a long time.
Queries were sent to Google to understand the tech giant’s perspective for 2023, its revenue projections and its stand on CCI orders. Most questions remained unanswered for reasons such as spokespersons being unavailable and Google didn’t share any forward-looking statements. The company did share a comment on the Android case:
“We have decided to appeal the CCI’s decision on Android as we believe it presents a major setback for our Indian users and businesses who trust Android’s security features, and potentially raising the cost of mobile devices. Android has greatly benefitted Indian users, developers, and OEMs, and powered India’s digital transformation. We look forward to making our case and remain committed to our users and partners.”
Tight scrutiny across the globe
What started as a search algorithm “BackRub” in 1996 by two students at Stanford University in California-Larry Page and Sergey Brin- Google became a ubiquitous search engine and the fourth largest enterprise in the world by market cap, at $1.43 trillion, after Apple, ArMaco and Microsoft within two decades.
After two decades of virtually unchecked growth from the world’s biggest walled gardens—particularly, Google, Meta and Apple—regulators and politicians across the globe are waking up to anti-monopoly enforcement.
Google’s success story is a case study for technocrats, though it is not free from controversies. The giant is facing tight scrutiny from regulators around the world over its alleged misuse of anti-competitive practices.
It suffered one of its biggest setbacks in September this year when a top European Union court upheld a 2017 ruling that it broke competition rules and fined it a record 4.1 billion euros for favoring its own shopping service in search results.
The United States, South Korea, Indonesia also took up the cudgels against Google for its discriminatory policies in different domains.
Outcome far away: Experts
While many experts feel that rulings in the EU and India may encourage other regulators to ratchet up pressure on Google and also set the tone for digital regulation in India, others point out that Google has not paid the penalties so far thus a precedent is yet to be set.
Stakeholders and complainants have no option but to wait and watch as it may take years for Indian authorities to see the penalties coming.
Hareesh Tibrewala, joint CEO, Mirum India, says, “I am not a legal expert but my observation is that this legal case will drag on for a long time. Then both the government and the party (in this case Google) will reach some kind of compromise; the fine amount will be reduced; and then Google will happily cough up the fine amount.”
“It’s obvious that paying a fine is cheaper compared to opening up the market for competition”, says Tibrewala.
To global tech giants like Google, governmental controls and regulatory tightening is part of everyday work, opines senior adman Sandeep Goyal, MD of Rediffusion. “The CCI penalty is part of the regulatory game global tech giants are well versed in. It is part of doing business – you win some, you lose some. So while to us in India the penalty may seem large, for Google, they are used to much larger numbers in payouts in EU and elsewhere.”
“I can’t predict how the NCLAT appeal will go. I don’t know what Google’s lawyers have said in the company’s defence but I think either way, Google frankly will take it in their stride to market dominance”, Goyal added.
Google is using delaying tactics (by approaching NCLAT) to extend the timelines, quips Rahul Vengalil, Executive Director of Everest Solutions.
How did it unfold?
It was in 2007 when Google shelled out roughly $50 million to buy a struggling mobile phone software company called Android. The acquisition turned out to be quite valuable for Google as touch screen mobile phones began to explode in popularity.
Allegations of unfair practices emerged in the EU around 2015 one of which led to a penalty in 2017.
“CCI’s probe into Google’s alleged anti-competitive practices initiated in 2020 after a complainant approached the regulator seeking a probe against the US major citing antitrust verdict in the EU,” a highly placed source said. The complainant’s name has been kept under wraps.
In the Android case, it was alleged that Google forced manufacturers to pre-install Google Search and its Chrome browser, together with its Google Play app store on mobile devices giving it an unfair advantage. Most users never download or use other browsers or app stores.
In the Play Store case, it was alleged that the app developers are not permitted to list their apps on the Play Store if they don’t comply with Google’s policy of using its own Billing System (GPBS). Third-party developers offering their apps on Google Play are charged 15 to 30 percent service fee, while others charge much less, claim developers.
In some cases, rival apps were allegedly blocked. For instance, MapMyIndia CEO and ED Rohan Verma has recently alleged, “During COVID in 2020, MapmyIndia’s app was showing people nearby containment zones as well as testing and treatment centers, helping them stay safe, something which Google Maps didn’t provide, but Google removed MapmyIndia’s app from Play Store.”
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