The Google paradox: Why India’s $162 million fine on the search giant is skewed by misplaced priorities

There is a funny story about Mullah Nasruddin that comes to my mind after the Competition Commission of India (CCI) ruling on Google owner Alphabet Inc which was fined Rs 1,338 crore ($162 million) for using its monopoly on the Android platform to bundle its own apps on the ubiquitous smartphones that come with the operating system.

One day, the mullah known for his tales of wisdom and humor was found on a sunny morning in a maidan, appearing to be looking for something. A passerby tried to help him and asked, “What have you lost?” The mullah said he had lost his keys, whereupon the man joined in to help him for a while and then asked, “But where exactly did the keys fall in your estimate?”

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“My home there,” the mullah replied calmly, stroking his beard and pointing to his distant home.

“Then why are you looking here?” asked the man.

“Because the light here is much better,” the mullah replied.

Such stories of wisdom abound because we often search for something not where we should be going but somewhere else – and that’s what India’s antitrust regulator appears to have done in what appears to be a notebook decision on Google which is contextually wrong while being conceptually understandable.

To unravel this paradox, you need to understand that Google is essentially a search monopoly, but a globally significant “ecosystem” player in the proliferation of smartphones that has benefited all kinds of people, from farmers and bakers to electricians. , students and rural artisans. It’s almost impossible to imagine how working from home has become a revolution during the Covid-19 pandemic around the world without giving the Android platform a big role in it.

That doesn’t mean Google is a disinterested angel. It just means we have to look at the nuances of what is now called the attention economy and the digital ecosystem to figure things out. The simple fact is that the social impact of the Android ecosystem is so deep, broad and beneficial, especially for India where the giant has done such a good job of helping Indian language computing and a demographic transition, that it is better described as a surge engine than a search engine. Given this, any attempt to police irregularities must weigh the costs and benefits against the odd trade in digital goods in which human attention and convenience are of paramount importance.

In arguments before the TCC, Google correctly pointed the finger at Apple and pitted its Android against the iPhone maker’s elite iOS. However, this argument is tricky because Android now has a much higher market share (71.6%) in the smartphone ecosystem compared to iOS (27.7%). The thing is, a simplistic market share-based approach to valuing what is essentially an infrastructure platform is flawed, although we have to ask some internet and operating system research questions to get to a significant finding.

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We need to get some historical details in the correct chronological order to better understand this. In the early 1980s, Apple invented the Mac desktop computers that revolutionized computing in the United States, leading Microsoft to partner with IBM to proliferate globally what became known as the name PC, or personal computer, allowing dozens of manufacturers to load a cheap computer. operating system that made the PC ubiquitous.

However, when the Internet arrived with its open protocols, Apple’s all-in-house ecosystem and the IBM-Microsoft partnership ecosystem based on the Disk Operating System (DOS) and its graphical successor, Windows, entered into a new phase. The browser became the new hunting ground, and gaming essentially moved from office productivity to ubiquitous computing where all kinds of people could do all kinds of things.

But it’s important to remember that Microsoft and IBM offered cheap DOS and Windows on a per-use, not exactly free basis, while Google almost correctly claims that Android is substantially free. The official gospel is: “Anyone can download, customize, and distribute Android source code at no cost. This allows manufacturers to create mobile devices at lower cost.”

However, mobile phone makers often pay third-party testing fees to Google for using its software, ranging according to a Guardian report between $40,000 and $75,000. I would say these fees are miniscule compared to the type of revenue generated by manufacturers such as Xiaomi, Samsung and a host of others that overlay Android and even sneak their own partner apps into cellphones. You should view the fees paid as a share of the revenue and benefits they help generate.

It’s Google’s search monopoly that’s trickier – or perhaps its Chrome browser, which increasingly bundles a Gmail account, the Android operating system, and the search box into what I would call a cognitive convenience loop.

Do you mind if the garlic bread is free with the pasta, or if you get a free dal with a roti-subzi combo (as was the case at many northern roadside restaurants from India) ?

The problem is, as the saying goes, “when a product is free, you are the product”. In the case of Android and its bundled apps, your attention itself is the product. As long as you consciously share it (like your data), Google is a benefactor, not a scammer or stalker.

In the particular case of India, a densely populated developing country, Google has more than hindered the digital revolution. Going forward, he needs to be monitored more and more, but I would argue that imposing a simplistic fine on him is not the right way to go. Taxing it more might make more sense, especially on the advertising side. Alphabet’s search monopoly and data privacy challenges require more regulatory intervention than its apps, though it must be remembered that a search engine is also an app. More and more, everything is linked.

In a separate case in 2018, the ICC fined Google Rs 136 crore for abusing its dominant position in search, claiming the engine “attributed disproportionate real estate” to results of sponsored flights putting players in the travel content trying to enter the market. This was a clear case of “paid search” undermining neutral search.

Contrast that now with the latest ICC ruling, in which the regulator says the search engine app and browser bundled together under its mobile apps deal with manufacturers gives “significant competitive advantage to search services.” Google search versus its competitors”.

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Now we have to go back to the fact that Microsoft has fought battles with European regulators in a series of cases for trying to bundle or force its own Explorer (now Edge) browser or other apps through its platform monopoly. Windows. India’s latest ICC ruling on Android goes in that direction, but it’s important to remember that it’s precisely the controversial bundling with Android that has created a positive social proliferation of computer and mobile apps in India and across India. other parts of developing Asia. According to Counterpoint Research, Google’s Android operating system runs on 97% of India’s 600 million smartphones.

The big question is whether CCI should use first-world criteria to assess the economics of digital platforms in developing economies. There are no easy answers in a dynamic context, but I would prefer a stronger tax regime to a fine, including a so-called Google tax to avoid tax on profits and royalties.

Another way to do this is to set a timetable for application unbundling or use funds from increased taxation or impose platform fees to enable state-subsidized access to less privileged sections. , in line with India’s Universal Service Obligation (USO) rules framed in the past to promote rural telephony.

It is time for higher courts who consider the public interest to consider this issue and for policy makers interested in greater social impact to approach this issue with the long term in mind. The new ICC ruling may be a case where India falls between the two stools of business regulation and social impact.

(Disclaimer: The views of the author do not represent the views of WION or ZMCL. WION or ZMCL also does not endorse the views of the author.)

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Amanda J. Marsh