[Tushar Chitlangia and Nikshetaa Jain are 2nd Year BBA.LLB (Hons.) students at National Law University, Odisha]
In the recent case of Baglekar Akash Kumar v Google (“G-Meet case”), the Competition Commission of India (“Commission”) has held that the integration of G-Meet and Gmail does not violate sections 4(2)(d) and 4(2)(e) of the Competition Act (“Act”). The Commission has held that as users are free to use alternative applications for video conferencing purposes, the integration of Google Meet (“G-Meet”) with Gmail cannot be said to cause coercion. This stance of the Commission departs from the long-standing jurisprudence of tying cases in the European Union (“EU”). Further, the Commission also departed from applying the standard test of tying which is followed for assessing violations of any alleged tie-in. Through this post we discuss what the outcome would have been if the standard test of tying had been followed.
Facts and Decision
Recently, Google integrated G-Meet, the video conferencing app, with the Gmail app. The informant in the case alleged that Google is using its dominant position in the market for emailing and direct messaging to enter into another market, i.e., the market for video conferencing, and hence violating section 4(2)(e) of the Act. While analysing the position, the Commission disagreed with the market delineated by the informant and therefore defined the relevant markets as “market for providing email services in India“and “market for providing specialised video conferencing services in India.” Without determining the dominance of Google, which is a prerequisite under section 4 of the Act, the Commission held that Google did not violate sections 4(2)(d) and 4(2)(e) of the Act. The reasons elucidated by the Commission were that first, Gmail users are not forced to use the G-Meet exclusively and, second, Gmail users are free to any other alternative for video conferencing purposes like Zoom, Cisco Webex, and Teams.
Tying refers to a situation where consumers, when buying one product (tying product), are forced to take or purchase another product (tied product) from the same seller. Tying can be of various forms, such as technical tying or contractual tying. Technical tying occurs when two products are physically integrated into each other and it is difficult to separate the two products [Richard Whish and David Bailey, Competition Law (7th edn 2011) at 689]. In the G-Meet case, G-Meet is integrated with Gmail, and it is impossible to separate the two applications, and hence it amounts to a case of technical tying.
The Indian law of abuse of dominance is similar to the EU law of abuse of dominance. Both the Indian and EU jurisprudence suggest that while analysing a case of anti-competitive tying, a four-fold test has to be applied. The test is as follows: first, the entity in question must be dominant in the tying market; second, there must be two separate products being tied; third, the consumer cannot attain the tying product without the tied product; and fourth, there must be anti-competitive foreclosure. However, in the G-Meet case, the Commission deviated from the precedent and solely based its conclusion on the third prong of the test, i.e., coercion, which was also narrowly interpreted and a distinct move from its peers. Now we will discuss the test in detail.
Market share is an important factor to establish dominance. According to the limited information available in the public domain, Google appears to be dominant in India in the market for providing email services. Further, other factors relevant for assessing dominance under section 19(4) of the Act such as large size and resources and customer dependence are also present. Therefore, Google appears to be dominant.
Two Product Test
To show that there exist two different products, it is to be seen whether the tied product has an independent demand. In the G-Meet case, G-Meet (the tied product) has an independent demand as recognized by the Commission itself. Further, companies are engaged in developing tied products without the tying product like Zoom and Skype. Therefore, G-Meet and Gmail are two distinct products as opposed to Google’s claim of G-Meet just being an added functionality.
The language of Article 102(d) of the Treaty on the Functioning of the European Union (“tfEu”), which resembles section 4(2)(d) of the Act, clearly implies that there must be coercion to accept the tied product and not coercion to use the tied product. Further, the European Commission in the Microsoft case has explicitly stated that to show coercion, the consumer need not be forced to use the tied product. Moreover, the Guidance Paper on Article 82 does not explicitly mention anything about coercion, which indicates that mere inducement can also amount to coercion. Therefore, coercion can be deduced from a mere ‘nudge’, especially in digital settings.
In the Google Search (Shopping) case, the European Commission has recognised visual prominence as a means of coercion. In the G-Meet case, the G-Meet tab is placed right below the display screen of the Gmail tab. Such a position of the G-Meet tab appears to be prominently placed which adds to the bias to the consumers. Such tying in a way reduces the consumers’ freedom and their independent judgement to choose the combination of products.
While deciding the Microsoft case and ascertaining the liability for Microsoft, the European Commission considered the fact that it was impossible to uninstall Windows Media Player from the Windows Operating System. Similarly, in the G-Meet case, the technological integration makes it impossible to separate the G-Meet tab from Gmail, i.e., G-Meet cannot be uninstalled. Further, the European Commission is of the view that it is immaterial that the tied product is obtained for free or any monetary sum. The mere fact that the tied product comes automatically with the tying product amounts to coercion. Furthermore, if the consumers can download alternative applications does not imply the absence of the element of coercion.
Most recently, the same reasoning was given by the European Commission in the Google Android case. The Commission held that the tying of Google search (the tied product) with Play Store and Google Chrome (the tied product) with Play Store violated Article 102 of the TEFU, and the actions of Google were held as anti-competitive tying. The Commission rejected the arguments advanced by Google claiming that original equipment manufacturers were free to install competing apps, the consumers were not coerced to use the tied product, and the tied product was being provided free of cost. Therefore, in the G-Meet case, there arguably exists an element of coercion.
The Commission has recognised that communication apps are “easily downloadable on smartphones and can coexist on the same handset without taking much capacity.” In this digital age when there are abundant apps at the disposal of the consumers, multi-homing is the norm, and consumers can easily shift from one app to another. However, the dominant entity, which Google seemingly is, has a special responsibility to prevent any anti-competitive harm in the market. This is because consumers tend to have some positive biases against a dominant entity, making consumers more prone to their products. Further, the risk of anti-competitive effect foreclosure is higher when there is a technical tie.
The digital markets are generally characterised by network effects. Network effects imply that the app’s value increases when a large number of consumers use it. In the instant case, the integration of G-Meet with Gmail is likely to increase the number of G-Meet users due to its prominent position in the Gmail tab and the status quo bias which comes along with pre-installed applications. Due to network effects, even other app users will prefer using G-Meet, which paves the way for potential foreclosure in the market. Proving potential or actual foreclosure due to tying in digital markets is a hard row to hoe. However, the limited data available suggests that Google is likely to cause foreclosure in the market.
The objective of preventing anti-competitive tying is two-fold. The first and primary objective is to protect the competitive landscape. When such tying is prevented, the consumers will not form status quo biases for the tied product which comes along with pre-installed apps. This would provide a level playing field to all players in the tying market. The second is to protect the consumer’s choice and freedom. Tying is frowned upon by major antitrust jurisdictions as it forces consumers to purchase or take a product they do not need and, thus, restricts their ability to choose a product based on merits.
While investigating a case of anti-competitive trying under section 4(2)(d) of the Act, the Commission should have applied the standard four prong test as laid down in the case of Harshita Chawla v WhatsApp and certain foreign cases. However, it deviated from its earlier position and decided the case solely on the basis of third prong of the test, i.e., coercion. Moreover, the Commission interpreted the element of coercion narrowly, which is very different from what is followed by the European Commission.
Tying in the digital market is desirable if it produces efficiency gains for the consumers that consumers cannot get through self-selection of products. In the G-Meet case, Google has submitted that integration of G-Meet with Gmail is a product improvement that benefits the consumers and is a means of meeting competition. However, it is difficult to imagine any efficiencies which the integration is likely to result in.
– Tushar Chitlangia & Nikshetaa Jain