CCI’s unfair call | The Financial Express

CCI’s unfair call

Govt should put in place a set of guidelines governing the entire app world to prevent stifling of innovation

CCI’s unfair call
As Google’s Android is an operating system built and developed by it, care should have been taken to examine the extent to which the tech major should be allowed to promote its own apps and billing system.

On the face of it, the Competition Commission of India’s decision to impose a total fine of Rs 2,274 crore on Google for indulging in anti-competitive practices with regards to its Android device ecosystem and play store policies, seems quite fair. Simply put, the charge is that the Android operating system built by Google makes it mandatory for device makers to pre-install a bouquet of its apps, which cannot be uninstalled. Similarly, its play store policies require app developers to exclusively and mandatorily use Google Play’s billing system not only for receiving payments for apps and other digital products but also for in-app purchases. Not only has the CCI found these practices anti-competitive and abuse of dominant market power, it has also directed Google to stop such practices. Judged purely from the prism of competition laws, such practices are anti-competitive, and needs to be checked.

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However, one needs to examine whether CCI has addressed the entire gamut of issues, and not taken a selective approach. As Google’s Android is an operating system built and developed by it, care should have been taken to examine the extent to which the tech major should be allowed to promote its own apps and billing system. For instance, device makers using Android OS must surely be pre-installing their own apps, but CCI has refrained from commenting on such aspects. This means that players which are not big in scale now are free to use Android OS to pre-install their preferred apps because they lack market. But when they grow in scale, CCI may have to look at the issue again. Such an approach in the past did immense damage to the telecom sector when a new player entered the market and disrupted the ecosystem to the detriment of incumbents.

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There’s another aspect on which CCI seems to have erred. The penalties are retrospective in nature when no such regulation with regard to operating systems, their usage, app stores, etc existed. They still do not exist. Since CCI is not a policy maker and is a regulator, it’s very much within its jurisdiction to direct Google to stop such practices prospectively. It is patently unfair to impose a hefty fine on an operator for a period when no regulatory guideline was in place. True, it’s the government which is to be blamed for not putting in place a proper regulatory framework, but the least CCI could have done is advise the government to do so. CCI could perhaps have looked at the well-developed regulatory systems which have been put in the telecom sector. For instance, discriminatory tariffs are not permitted, which means a telecom operator is free to provide any of its app to its subscribers free of charge so far it is restricted to its app store. The moment the app concerned is available on the web, dual pricing is not allowed. Further, when and how an operator acquires dominant market power is laid down in terms of subscriber and revenue market share so that regulatory light can flash if there’s any breach. A set of such guidelines are in place for social media platforms, too. Since the issue of anti-competitive practices in the Android ecosystem has been flagged by CCI, the government should expeditiously put in place a set of guidelines governing the entire app world. Else, such issues would keep on vitiating the competitive landscape and stifle innovation.

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First published on: 27-10-2022 at 04:45 IST