Play, Pay, News: Why Google’s services are on CCI radar

Updated on Jan 15, 2022 12:13 AM IST

The latest investigation is on how Google runs News, an aggregation service deeply embedded within Google Discover and Google Search platforms on phones and PCs.

In many countries, Google has been under the scanner for how it negotiates with news publishers.(AFP)
In many countries, Google has been under the scanner for how it negotiates with news publishers.(AFP)
By, New Delhi

Google is very much in the regulatory crosshairs, in India. The Competition Commission of India (CCI), the antitrust regulator’s recent order for a probe into the Google News platform practices, is the fifth such investigation opened into the tech behemoth’s practices in the country.

Under scrutiny are products, services and policies, such as how the company allows purchases on its Play Store, its efforts to promote Google Pay, its licensing deals for Android TV and the perceived dominance of Android, which is seen to have restricted competition as well as choice for users. CCI has already fined Google 135.86 crore in 2018 for bias in Search results, a space where the tech giant is the leader globally.

The news problem

The latest investigation is on how Google runs News, an aggregation service deeply embedded within Google Discover and Google Search platforms on phones and PCs.

The Digital News Publishers Association (DNPA), which includes the digital arms of India’s biggest media houses (including Hindustan Times), has raised concerns regarding the opaqueness of the algorithms that determine which news website gets more visitors (that result in clicks) from search results and has questioned unilateral decisions on revenue sharing with publishers, whose snippets are often used in News and Search to enrich results.

“As DNPA, we are very grateful to CCI that they have taken up the matter and we are confident that the justice will be served,” Sujata Gupta, secretary general, DNPA said. Google India did not respond to requests for comment.

The probe order clarifies that Google is potentially violating provisions of Section 4 of the Competition Act, 2002. “The allegations of the Informant, when seen in this vertically integrated ecosystem operated by Google, makes it prima facie appear that news publishers have no choice but to accept the terms and conditions imposed by Google,” said the CCI in the order. In a way, Google is the gateway between publishers and readers.

Google News globally rivals aggregator platforms, such as Microsoft Start (this replaces Microsoft News) and Apple News. But neither has the advantage of being integrated in a platform as large as Google Search, though Microsoft is changing that with the optional taskbar integration for the news feed app in Windows 11.

“A reading of CCI’s prima facie order against Google and Alphabet Inc. shows that there is adequate incriminating information and evidence demonstrating Google’s monopoly and abuse of dominance in the relevant market, that is online web search services and online search advertising services,” said Abhishek Malhotra, managing partner at TMT Law Practice.

Revenue loss is a concern for news publishers. “The Informant alleges that Google is the major stakeholder in the digital advertising space, and it unilaterally decides the amount to be paid to the publishers for the content created by them,” the probe order notes.

“Intervention through competition law or regulation is the right way to bring fairness and ensure viability of the news industry which is the fifth pillar of democracy,” said Vikas Kathuria, associate professor, School of Law and head, Centre on Law, Regulation & Technology, BML Munjal University.

In many countries, Google has been under the scanner for how it negotiates with news publishers. The company was fined $592 million in France in July 2021 for breaches in negotiating payment terms with publishers for reusing content.

Google has since made some proposals to the French authorities, such as “negotiate in good faith” with publishers and no impact on ranking for protected content, and five-year revenue agreements.

In 2020, the Australian government first mooted the News Media Bargaining Code to ensure platforms such as Google and Facebook have content deals with news publishers. In 2021, ahead of a law being passed by Australia, Google scrambled to sign deals with major publishers.

“It will ensure that news media businesses are fairly remunerated for the content they generate. Freedom of Media is a mandate as per Article 19 of the Indian Constitution. Bringing Google within the framework of Indian Law will ensure the Right of Life of crores of developers and users in India,” said Virag Gupta, a lawyer and Cyber Law expert.

Google Play’s restrictions

The tech giant is also being investigated for Play Store policies. The new Google Play billing system, which developers must mandatorily integrate in all apps and games they publish on the Play Store for Android, will be the sole route for in-app purchases. Be it one-time purchases or subscriptions. Google takes a cut from each transaction.

“By forcing their choice of payment system on app owners and by denying the app owners their choice of payment provider, Google is indulging in anti-competitive behaviour by abusing their market,” said Sijo Kuruvilla George, executive director of Alliance of Digital India Foundation (ADIF).

There are serious numbers at play here. Android has around 95.24% market share in India, according to latest numbers by research firm StatCounter. Apple’s iOS for iPhone follows as a distant second, with 3.76% share. Google Play Store is the official platform for downloading apps and games on Android devices. The Play billing system gives advantage to Google Pay, the company’s own digital payments platform.

Google has insisted that a very small number of developers will be impacted by the changes. “Irrespective of how many app owners it affects, this practice is in violation of competition laws,” added George.

Last year, Google slashed commission fee from 30% to 15%, for some transactions, such as subscriptions.

In Korea, Google is now providing alternative payment systems for Play Store developers to choose from. A new law banned app platforms from monopolising payment methods, which has forced tech giants including Google, to widen the options available to developers. The Korea Fair Trade Commission (KFTC) has already imposed a fine of $176.64 million on Google in September for antitrust practices.

Advantage Google Pay?

CCI has been scanning Google’s policies for perceived privilege given to payment app Google Pay, including being preloaded on Android phones being sold in India. Google Pay was earlier called Google Tez. The contention is that Google Pay’s rivals, which include PhonePe, Paytm, Amazon Pay and WhatsApp Pay, do not have the same privilege.

The market is massive. Some of the most popular phones in India run Android.

“A similar case in Europe was that of Internet explorer being preloaded on Microsoft Windows computers, thereby affecting the market of other browsers. Microsoft was forced to give an option to users to select the browser. Bundling of Google Pay on Android phones could be a similar case affecting competitors in the space,” says Prasanth Sugathan, legal director, Software Freedom Law Center (SFLC.in).

George said the amount of user data Google already holds, when topped up with financial data of users, could serve to extend its dominance and monopoly.

Android monopoly, a global problem

Smartphone operating system Android is also under the scanner, for highlighting Google’s own apps. In a not-so-surprising twist, CCI said in September 2021 that it found Google guilty of anti-competitive behaviour and restrictive trade practices around Android and the phone market.

Google Pay isn’t the only app that gets prime preloading privilege on Android phones. Ten apps, including Gmail, Chrome, Maps, Photos and Search, must be mandatorily preloaded on Android phones if the phone maker wishes to integrate Google Mobile Services (GMS) in the Android they use.

If they don’t, they can only get access to a barebones Android version – that isn’t really an option in the highly competitive Android phone market.

This specifically isn’t an India problem.

The UK Government’s Competition and Markets Authority (CMA) released a report in December, which says that Apple and Google have too much control over operating systems (iOS and Android), app stores (App Store and Play Store), and web browsers (Safari and Chrome) that together form their ‘ecosystems’. There is a concern that when people buy a phone running either platform, they are largely controlled by this ecosystem.

Google is still fighting a €4.34 billion ($5 billion) fine imposed by the European Union in 2018 after being found guilty of similar anti-competitive behaviour with Android.

Bias in Search

CCI imposed a penalty of 135.85 crore on Google in 2018, after it was found guilty of bias in search results. The findings indicate Google’s search results were tailored to favour the company’s own services and partners while also deploying advertising services to disadvantage some advertisers over others.

“Existence of monopolies in the tech space is a reality and we have seen actions being taken by various regulators in Europe and the US against Microsoft, Google, Facebook, Apple and Amazon,” says Sugathan.

This isn’t the first time Google has been fined. “In three antitrust cases, $9.7 billion fine has been imposed on Google by the European Commission. In the US, many states have filed a lawsuit against Google over alleged anti-competitive practices to boost its online advertising business by illegally working with social network Facebook,” Virag Gupta points out.

TV agreements under lens

Google’s agreements with smart TV manufacturers are also being investigated. In this case as well, there is the issue of Google requiring TV manufacturers to sign the Television App Distribution Agreement (TADA), and an Android Compatibility Commitment (ACC), which mandate that an entire suite of Google apps must be preloaded on TVs, including YouTube, Google Play Movies and Play Store.

What to expect?

It may be a while before any fines are imposed on the Android anti-trust verdict, and for the investigations in progress to be completed. There is expectation that the investigation on Play Store billing policies, will be completed within 60 days. That, and the Google News policies probe, are the two big ones.

“There is a high likelihood that in both the cases, Google may be held liable for abuse of dominant position, given the extensive incriminating evidence available. Once held liable, the quantum of penalty will be imposed on the basis of Google’s turnover as per applicable provisions of the Act,” said Malhotra.

CCI will be setting a marker with the verdict on Google’s Play Store practices. The antitrust regulator has already opened investigations against Apple’s App Store policies, including in-app transaction commission, not allowing competing application stores on iPhones, and approval policies for app submissions.

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  • ABOUT THE AUTHOR

    Vishal Mathur is Technology Editor for Hindustan Times. When not making sense of technology, he often searches for an elusive analog space in a digital world.

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