Google is hurting in India this week. It probably won’t be the last time.
October is shaping up as a frightful month for the American search giant, after India’s antitrust regulator imposed two separate fines totaling more than $250 million. That is only the latest sign that New Delhi is highly skeptical of U.S. tech firms’ bid for supremacy in the world’s second largest internet market by population.
Last week, the Competition Commission of India (CCI) accused Google of abusing its dominance of the Android ecosystem and its relationships with smartphone makers to protect its search business and key apps like YouTube. This week the CCI also said Google unfairly promotes its own payment system. CCI directed Google to give smartphone users a choice of search engines on new phones, allow app developers to freely use third-party payments systems, and said smartphone vendors shouldn’t be forced to pre-install its apps.
Google says its model has expanded digital access for hundreds of millions of Indians and called the first decision a major setback for consumers and businesses. It is reviewing both decisions to evaluate next steps.
It is difficult to say how much direct harm Google’s India business could sustain. Android has already helped make Google Search dominant on mobile, and consumer habits may be difficult to shift. However, the second ruling means Google could lose out on significant future revenue: For now, the impact will be small as Indians don’t spend much on in-app purchases.
More worrying is the precedent set—not just for Google, but other American tech giants as well.
Earlier this month, the Supreme Court of India denied
-backed Flipkart’s arrangements with its merchants.
Salman Waris, partner at TechLegis, a tech-focused law firm in New Delhi, believes these orders are just the beginning of many such aggressive antitrust actions against large technology firms by the government—which could set uncomfortable precedents for cases outside India too. If other big emerging markets decide to emulate India and Europe’s unforgiving approach to competition enforcement, that could create significant uncertainty for U.S. tech giants’ expansion plans. In Europe regulators imposed a $5 billion fine against Google in 2018 for allegedly forcing manufacturers to pre-install apps. Google lost an appeal last month. Last year, South Korea told Google and Apple to open up their platforms to outside payment systems.
Given the stakes, Google and its peers seem likely to fight tooth and nail. Bain & Co. estimates India has 640 million internet users—around twice the population of the U.S. Google’s Android operating system is the dominant operating system for smartphones in India—powering a full 97%, versus just 54% in the U.S. according to Counterpoint Research.
The battle for India’s massive internet market is shaping up as more of an obstacle course than a sprint. U.S. tech giants have little choice but to clamber over each hurdle—and try to knock down the truly dangerous ones.
Write to Megha Mandavia at firstname.lastname@example.org
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