Google enters into various agreements with all major OEMs to not only ensure that its Android OS is carried on a “crushing majority” of the OEMs’ smart mobile devices sold across India, but also to ensure that all of Google’s 11 money-generating applications–referred to as Core Applications by Google in its own agreements–is preinstalled as a bundle on such devices, N Venkataraman, Additional Solicitor General (ASG) of India told NCLAT on Monday.
In the resumed hearing in Android matter post Holi, Venkataraman, representing CCI, also said “Over and above, Google controls the pre-installation, placement and preferential treatment of its apps, and not only restricts competing apps and Android forks, but also requires OEMs to submit their devices for approval prior to their launch. Effectively, it is able to do this for almost the entire portfolio of OEMs’ devices who enter into agreements with Google”.
The ASG on Monday commenced substantive arguments against Google’s appeal against the Competition Commission’s order of October 20 last year.
Venkataraman highlighted that the conspectus of interdependent and interrelated agreements are also used by Google to coerce OEMs to render such 11 preinstalled core applications even more favourable in the eyes of users, thus creating ‘digital addiction’ in the minds of users who, over time, only identify with Google’s apps and services to the detriment of Google’s competitors.
This behaviour bias and ‘status quo bias’ is induced in the minds of users by ensuring that the agreements also obligate OEMs to treat Google’s apps in a much more preferential manner than Google’s competitors.
These obligations contained in various agreements (MADA, AFA/ACC and RSA) must be read together to gauge the cumulative effect, he added.
The obligations are preinstallation of Google’s 11 core applications, premium placement of Google’s 11 core applications on the device’s home screen, which is the most ‘fertile’ and visited part of the device by users (thus, countering Google’s submission that competitors are free to preinstall their own apps on the device as well), ensuring that users cannot uninstall Google’s preinstalled core applications, unlike competing apps which can be uninstalled, ensuring that Google Search—which lies at the heart of Google’s revenue generating strategy—is also the exclusive and default search engine on OEM’s devices.
Even where agreements permit OEMs to preinstall or allow the subsequent installation of apps/functionalities utilising competing search services, the agreements (RSA) obligate OEMs to ensure that such apps/functionalities are relegated to the third screen (Minus 2 and below), he added.
The ASG emphasised that by virtue of the RSA, OEMs are not permitted to introduce, present or even suggest in any manner any alternative search service to users. Furthermore, at least 4 instances in various agreements were highlighted where OEMs were required to take written permission of Google to even make the most basic decisions regarding their devices launch and operation.
Therefore, the ASG requested that Google’s selective reliance on ‘empty’ clauses and recitals contained in the agreements to show that Google does not intend to make its apps and services default or exclusive, or restrain OEMs from installing competing applications, is totally meaningless. The ASG went further and requested the Tribunal to strike out such empty clauses that camouflaged the true intent and import of the agreements.
The ASG also assailed Google’s argument that the agreements cannot be read together and must be read in isolation of one another. The ASG adverted to the obvious inter-dependence of the agreements:
The ASG also emphasised that Google’s competitors have no chance of surviving in a market where Google enters into this web of agreements with OEMs. In this context, the ASG highlighted that the Competition Commission also correctly pointed out the vast amount of monetary incentives offered by Google to OEMs to enter into RSAs and ensure that Google Search is set as the default and exclusive search service on all MADA Android devices.
The ASG also highlighted the vast disparity between Google and its competitors in exercising leverage over OEMs regarding RSAs. As noted in the Competition Commission’s Order, while Google leverages its dominance in the market over OEMs to share merely 10 per cent of its search revenue with OEMs through RSA, its competitor Microsoft has to share as much as 90% of its search revenue in order to enter into similar arrangements, the ASG noted
The ASG also highlighted that Google had perpetuated a myth regarding Commission’s confusion over Portfolio-based RSAs vs. Device-based RSAs: