Google Reaches Settlement with CCI Over Smart TV Operating System.

Background

The informants allegs that Google's Android operating software, which is used to power the user interfaces on devices holds the dominant position in the relevant market. This software was the most popular and widely adopted by TV and smartphone manufacturers, also known as Original Equipment Manufacturers (OEMs). Google had entered into agreements known as the Television App Distribution Agreement (TADA) and the Android Compatibility Commitments (ACC) with smart TV OEMs. It was alleged that, through restrictive clauses in these agreements, OEMs were required to pre-install the entire bundle of Google Apps included in the Google TV Services (GTVS) on their smart TV devices.

Additionally, the agreements provided for the placement of pre-installed Google apps on the home screen, with a particular order that OEMs were obligated to follow, leaving OEMS with no control over the user interface. If OEMs wanted to include any third-party applications, the TADA allegedly required that these apps be displayed only after Google's own apps.It is the case of the informants that such agreements violated the provisions of Section 3(4) and Section 4 of the Competition Act. The Competition Commission of India, through a prima facie order dated 22.06.2021,found that device manufacturers were forced to sign the Android Compatibility Commitment (ACC) as a precondition for installing Google's proprietary apps, such as the Play Store. This agreement prevented OEMs from developing or distributing devices that used alternative versions of Android.Further, the TADA agreement, which required OEMs to pre-install Google apps like YouTube, was also identified as an anti-competitive practice.The commission directed the Director General to investigate and submit the report.The Director General submitted an Investigation Report to the Commission, which found that Google abused its dominance by tying Play Store access to the ACC agreement, restricting Android forks and limiting market access.Following the adverse findings in the DG's report, Google submitted its first Settlement Application on 21.05.2024, seeking to resolve the proceedings. While considering the settlement application, the Commission sought the views of stakeholders. During this process, the informants expressed concerns over the lack of clarity regarding the scope of the waiver and additional obligations. They also argued that the issues of pre-installation and uninstallation options for Google apps were not addressed and deemed the five-year commitment insufficient. This prompted the Commission to seek clarification from Google regarding the settlement terms.

Subsequently, on 26.06.2024, Google submitted an updated summary of the settlement proposal and requested that the Commission consider the revised proposal for further settlement proceedings in the matter.

Observation of the Director General

The DG, considering factors such as market share, Google's control over Android, and consumers' reliance on the Android OS, observed that Android Smart TV OS held a dominant position in the relevant market of licensable Smart TV operating systems. In examining the potential for a tie-in agreement, the DG found that the TADA and ACC agreements were signed together, effectively requiring OEMs to preinstall Google's proprietary applications, including the Play Store, in order to access essential services. This practice restricted device manufacturers' ability and incentive to develop and market devices using alternative versions of Android (Android forks), thereby hindering technical and scientific development and blocking market access for fork developers. The DG also noted that Google's terms prevented OEMs from pre-installing or working on non-compatible Android versions across all devices marketed under the same brand, even those not using Google's proprietary apps or based on the Android Open Source Project (AOSP). Additionally, Google's requirement for OEMs to seek approval for all devices and refrain from distributing non-GTVS versions of Android imposed supplementary obligations unrelated to the contracts' main purpose. These actions were found to violate the Competition Act by limiting competition and innovation within the Android ecosystem. Furthermore, when investigating whether Google had abused its dominant position by bundling the YouTube app with the Play Store, the DG considered factors such as the number of YouTube accounts in India, the extensive volume of videos, YouTube's advertising revenue, the low download rates of competing apps, YouTube's prominent placement on device screens, and the inability of users to uninstall the app. Based on these factors, the DG concluded that Google had indeed abused its dominant position by tying the YouTube app to the Play Store.Furthermore, the DG found the claims of agreements being in the nature of 'refusal to deal' and 'exclusive supply' allegations remained unsubstantiated.

Terms of Settlement

Google submitted its amended settlement proposal, which included the introduction of a standalone license called the “New India Agreement” for Google Play Store and Google Play Services. This agreement did not require the pre-installation of the Play Store or any other Google services. It would be available to both existing Android TV OEMs and any new OEMs interested in participating, with licensing provided for a fee. Under this agreement, OEMs would have the option to offer devices with either forked software or the existing operating system.Additionally, Google proposed ending the requirement in the App Distribution Agreement that OEMs have a valid Android Compatibility Commitment (ACC), which previously required pre-installing Google apps. Google also offered to send a letter to its Android TV partners in India, reminding them of their current flexibility to use the open-source Android OS for smart TVs without needing to install any Google apps. The letter would also highlight that partners could use competitors' operating systems.Google has committed to adhering to all three settlement proposals for five years, starting from the Commission's acceptance of the settlement. In addition, Google also announced that it would stop certifying new Android TV models starting 1 July 2025. This meant that OEMs would no longer be able to certify new Android TV models under the Android TADA after June 2025. However, Google pledged to continue supporting existing devices through ongoing arrangements until the end of 2029.

Anil Agrawal, member of the committee, dissented with the settlement, stating that the terms offered by Google were prima facie insufficient to address the competition concerns identified by the DG. He noted that the proposed New India Agreement did not eliminate the existing arrangements under TADA, which had been found to be anti-competitive and in violation of the Act, and that Google intended to continue offering TADA alongside the New India Agreement.

Case Title:Kshitiz Arya and another vs Google LLC and others

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