{"id":8783,"date":"2024-03-24T18:21:24","date_gmt":"2024-03-24T18:21:24","guid":{"rendered":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/03\/24\/searching-for-google-will-legal-hurdles-threaten-tech-giants-grip-on-india\/"},"modified":"2024-03-24T18:21:24","modified_gmt":"2024-03-24T18:21:24","slug":"searching-for-google-will-legal-hurdles-threaten-tech-giants-grip-on-india","status":"publish","type":"post","link":"https:\/\/news.talkwithrattan.com\/index.php\/2024\/03\/24\/searching-for-google-will-legal-hurdles-threaten-tech-giants-grip-on-india\/","title":{"rendered":"Searching for Google: Will legal hurdles threaten tech giant\u2019s grip on India?"},"content":{"rendered":"
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Google<\/a> appears to be hurdling as many regulatory barriers lately in India as the answers its search engine generates in response to a query. Ironically, the latest in the list of uncomfortable questions is the Mountain View giant\u2019s alleged role in limiting local consumers\u2019 choice, contrary to what the encyclopaedic Google search engine is actually designed to offer. <\/p>\n

Last Friday, the Competition Commission of India<\/a> (CCI<\/a> ) prima facie ordered a probe to examine Google\u2019s Play Store billing policies <\/a>after Indian companies raised concerns about hosting their apps on the go-to consumer platform. <\/p>\n

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However, on Wednesday, India\u2019s antitrust watchdog put out an interim order dismissing the applications<\/a> saying it found no grounds to provide interim relief but that the director general (DG) could go ahead with the investigation. While this could be some reason for Google to cheer, the company\u2019s regulatory woes are far from over. <\/p>\n

\u201cEvery regulator worldwide that has looked at this sector has come to very similar conclusions, and the CCI has been among the leading agencies on this,\u201d Tom Smith, competition lawyer at Geradin Partners in London and a former legal director at the UK\u2019s competition agency, told ET. <\/p>\n

He added that regulators have found the way Google operates its app store hinders competition, and the ecosystem needs to be opened up to allow innovation to flourish. <\/p>\n

\u201cApp developers rightly argue that their apps provide as much benefit to Google as vice versa. There would be no need for a high-powered smartphone without users\u2019 favourite apps being available,\u201d he said. <\/p>\n

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Discover the stories of your interest<\/h3>\n<\/div>\n
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Smith said that there should be competition between payment providers to develop the best payment solutions, but this is currently blocked off by the two main mobile operating systems \u2014 Google\u2019s Android and Apple\u2019s iOS. Earlier, New Delhi rapped Google for its AI chatbot Gemini\u2019s responses and had to effectively intervene to negotiate a truce between the company and some developers who had been delisted. A 2022 local antitrust order pertaining to Google imposing unfair market conditions on Original Equipment Manufacturers (OEMs) by bundling apps and forcing OEMs to pre-install them was a big blow to Google financially, forcing changes in the company\u2019s operating model in India. Soon after, it passed another order mandating Google to allow alternative payment methods. <\/p>\n

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Last year, there were also concerns that YouTube could face a ban<\/a> over alleged child sexual abuse material (CSAM). But this long-simmering problem over the commissions Google charges on Play Store<\/a> display has only escalated over time, engulfing more stakeholders. <\/p>\n

Several app developers in India have been leading the charge in the fight against Google\u2019s commissions, wherein they have said that Google\u2019s hefty charges will make the app development ecosystem all but unviable. <\/p>\n

The fight between developers and the search giant came to a head this month when Google decided to enforce its payments policy following what was a setback to app developers when the Supreme Court refused to restrain Google from \u201cdelisting\u201d apps from its Play Store. <\/p>\n

Google, in its statement at the time, said only 10 Indian developers using Google Play had chosen not to pay for the services. It then went on to delist more than 150 apps<\/a> belonging to these developers.<\/p>\n

State brokers truce<\/strong><\/p>\n

Google reinstated the apps only after federal intervention. IT minister Ashwini Vaishnaw met both Google and the startup community<\/a> on March 5. <\/p>\n

\u201cWe have had very constructive discussions and finally Google has agreed to list all the apps as on the status there was on Friday (March 1). That status will be restored. Google has been supporting our technology development journey and we believe that in the coming months, both startup companies and Google will come to a longterm solution,\u201d the minister said at the time. <\/p>\n

App developers believe Google\u2019s offers are commercially unattractive. \u201cGoogle has provided developers with three options as per its payments policy,\u201d Murugavel Janakiraman, founder, Bharat Matrimony, told ET. <\/p>\n

\u201cThe first two involve in-app payments on which we will have to pay a hefty commission of 11 per cent or 26 per cent, and the third is the consumption model where users can\u2019t make payment through the app \u2014 which will affect revenue and also user experience. Effectively all the three billing options affect revenue and hurt Indian startups.\u201d <\/p>\n

Backing Janakiraman\u2019s views was a competition lawyer who did not wish to be named. She said that apps changing their entire business model to \u2018consumption only\u2019 was a big deal as they were that desperate to avoid paying the \u2018Google tax\u2019. <\/p>\n

\u201cConsumption (model) is what folks like Netflix can afford to do, as they already have a user base that will do the additional steps of going on a separate web page to pay fees and come back to the app to watch content. Not all apps can afford to lose the users in this process, which causes friction in the user experience,\u201d she said. <\/p>\n

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\u2018Retailing commissions just\u2019<\/strong><\/p>\n

However, not everyone agrees with that line of reasoning. \u201cMobile platform operators like Google deserve to earn money from their storefronts built through significant infrastructure investments,\u201d Eric Seufert, general partner at Heracles Capital, told ET. <\/p>\n

\u201cBut discoverability on the mobile app stores has become more challenging and therefore more expensive over time, necessitating significant marketing expenditure from developers.\u201d <\/p>\n

He said that while it was understandable why developers would like to see app store commissions decrease, both Google and Apple reduced the commissions paid on subscription renewals in 2016 and slashed commissions in half for small businesses in 2021. <\/p>\n

\u201cYet, there have been no broadbased price reductions in mobile digital goods or subscriptions. Google and Apple seem unlikely to make further changes to their commission rates unless consumers demand it or courts force it,\u201d he said. <\/p>\n

So far, the CCI had not commented on the commissions aspect but that changed last week when, in its prima facie order, it said the anti-monopolies regulator has said that in certain cases, they can take on the role of a price regulator in the short-term. Google, on its part, has consistently argued that the CCI is not a price regulator and that no court has so far said anything against the fee that they charge. <\/p>\n

\u201cWe are examining CCI\u2019s order initiating the investigation,\u201d a Google spokesperson told ET. \u201cThe CCI has previously examined our service fee in detail between 2020 and 2022 and found no illegality. However, we take our commitment to comply with local laws and regulations in India seriously and will cooperate with the process in every way.\u201d <\/p>\n

The latest CCI verdict denying interim relief was based on a new complaint by People Interactive and some other developers specifically about the service fee levied on Google Play and is a separate investigation from the previous order issued by the CCI on Google Play in October 2022, in which it mandated the inclusion of alternate billing systems along with Google Play Billing System, which Google had complied with by introducing User Choice Billing. <\/p>\n

\u201cIt is certainly a good order for Google because the CCI has not found any evidence which requires urgent intervention, such as an interim order,\u201d Ashish K Singh, managing partner at Capstone Legal, said. <\/p>\n

\u201cThe investigation by the DG is a complex process, which involves analysing documentary evidence. Generally, the DG issues a questionnaire seeking documents related to the allegations. Based on this, a report is submitted to the CCI.\u201d <\/p>\n

He added that a more proactive regulator is a result of Indian companies that are raising their voice against international firms. \u201cI see this as a mechanism to ensure that Indian Competition Law is followed by international companies,\u201d Singh said. <\/p>\n

Some competition lawyers ET spoke to, however, said Google\u2019s policies were perfectly in compliance with the CCI\u2019s order because it did not mandate Google in any manner to reduce its commission.<\/p>\n

\u2018Price setter role\u2019<\/strong><\/p>\n

Further, they also warned that if the CCI looks at possibly playing a price regulator\u2019s role, it could have a chilling effect on entrepreneurship and on anyone who wants to do business in India. <\/p>\n

\u201cWe are moving towards a market economy system where the regulator\u2019s job is to be the referee, not the rule setter, particularly in the context of antitrust or competition enforcement. I\u2019m concerned what signal an intervention which attempts to cap the prices will send to young entrepreneurs in this country, to global MNCs who want to come and do business here,\u201d another competition lawyer ET reached out to said. <\/p>\n

Big Tech giants including Google have been under fire the world over for their alleged monopolistic practices<\/a>. India is second only to China in terms of the number of software developers, who number over six million people. <\/p>\n

So, it is no wonder that Google is betting big on this market. It all started on October 20 when the anti-monopolies watchdog imposed a Rs 1,337.76 crore fine on the search giant <\/a>for abusing its dominant position in multiple markets through Android. Less than a week later, on October 25, the CCI imposed a penalty of Rs 936.44 crore <\/a>on Google for abusing its dominant position with respect to its Play Store policies, apart from issuing a ceaseand-desist order. <\/p>\n

\u201cThe cases decided previously in India are consistent with and have often followed similar investigations against Google in other jurisdictions, including Europe, US and several Asian countries, Yaman Verma, partner at Shardul Amarchand Mangaldas, told ET. <\/p>\n

\u201cGlobally, there seems to be a spotlight on Google\u2019s business practices, which are generally being viewed as unfair and anti-competitive.\u201d Verma said it is likely that we will continue to see more cases being filed against Google, where the Indian competition authority would impose penalties and direct changes in its business conduct. <\/p>\n

\u201cWhile we can expect more sanctions directed against Google, the CCI will also have to direct watertight remedies to ensure effective market corrections,\u201d Verma added.<\/p>\n

Fresh pain point<\/strong><\/p>\n

But it is not just the CCI that Google is battling. On March 12, a high-level official panel under Corporate Affairs Secretary Manoj Govil proposed a new digital competition law<\/a> with a set of dos and don\u2019ts under an ex-ante framework to address potential abuse of dominance or other antitrust concerns involving big tech companies. This too could be another pain point for Google, experts said. <\/p>\n

\u201cThe draft digital competition bill [prepared by the Committee for Digital Competition Law] also seeks to regulate, ex ante, conduct of large technology platforms like Google,\u201d Verma said. \u201cA number of the anticompetitive practices highlighted in the draft bill have been identified as violations of the existing Competition Act in decisions against Google, so this will lead to additional regulatory scrutiny qua (acting in the capacity of) the same conduct.\u201d<\/p>\n

Gemini question mark<\/strong><\/p>\n

In February, Union Minister of State for Electronics and Information Technology Rajeev Chandrasekhar came down heavily on Google after its AI tool Gemini <\/a>came under fire on social media for allegedly responding to a user\u2019s question about PM Modi indicating that his policies were considered by some as being \u201cfascist\u201d. <\/p>\n

\u201cGemini is built as a creativity and productivity tool and may not always be reliable, especially when it comes to responding to some prompts about current events, political topics or evolving news,\u201d a Google spokesperson said at the time. <\/p>\n

\u201cThis is something that we\u2019re constantly working on improving.\u201d Chandrasekhar, however, hit back at the big tech firm in a tweet on where he said \u201c[Saying] \u2018sorry, unreliable\u2019 does not exempt the company from law\u201d and followed it up by saying that \u201cdigital nagriks are not to be experimented on with \u2018unreliable\u2019 platforms\/algos\/models. Safety and trust is the platform\u2019s legal obligation\u201d. <\/p>\n

\u201cGoogle is a large company that views India as a big opportunity,\u201d an industry watcher who did not wish to be named said. <\/p>\n

\u201cTheir products are embedded in our daily life. The power Google wields is enormous and there\u2019s no running away from that. No matter how much we try to build our own products, it will not reach Google\u2019s level of sophistication and adoption in the foreseeable future, so the only way to keep Google in check is through constantly throwing regulatory hurdles their way in order to ensure their power does not go unchecked. This is happening the world over and India is no exception. It will only get more pronounced going forward.\u201d<\/p>\n<\/div>\n

<\/p>\n","protected":false},"excerpt":{"rendered":"

Google appears to be hurdling as many regulatory barriers lately in India as the answers its search engine generates in response to a query. Ironically, the latest in the list of uncomfortable questions is the Mountain View giant\u2019s alleged role in limiting local consumers\u2019 choice, contrary to what the encyclopaedic Google search engine is actually […]<\/p>\n","protected":false},"author":2,"featured_media":8784,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"tdm_status":"","tdm_grid_status":"","fifu_image_url":"https:\/\/img.etimg.com\/photo\/88591548.cms","fifu_image_alt":"","footnotes":""},"categories":[607],"tags":[1961,1962,962,1098,13601,13600,13599,7941,1923,273,2846,13598,1963,13602,2416,13603],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/8783"}],"collection":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/comments?post=8783"}],"version-history":[{"count":1,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/8783\/revisions"}],"predecessor-version":[{"id":8785,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/posts\/8783\/revisions\/8785"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media\/8784"}],"wp:attachment":[{"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/media?parent=8783"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/categories?post=8783"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/news.talkwithrattan.com\/index.php\/wp-json\/wp\/v2\/tags?post=8783"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}