The Competition Commission of India (CCI) on October 21 imposed a fine of Rs 1337.76 crore on Google in connection with the Unfair Business Practices case. Just before this, on October 19, CCI imposed a fine of 392 crores on MakeMyTrip and Oyo. In September, online real money gaming startup Gamescraft was issued a notice of GST evasion of 21 thousand crores. The verdict against Google may change the face of the market for apps, mobile operating systems and mobile devices, but Google’s troubles are not over yet. At present, CCI’s investigation is going on against him on the complaint of News Broadcasters and Digital Association. The decision in this case may change the way online news searches are conducted in India. With the expansion of the Internet, the government’s focus on regulating the virtual world has also increased greatly. In the last three years alone, the CCI has given 238 decisions related to antitrust. Most of these are related to online companies. The activism of the CCI is also evident from the fact that the Commission, formed in 2003, has given a total of 1054 decisions so far and 826 of these decisions have been given after 2017 i.e. 78%. Know, how the government has increased strictness on every online business from travel to gaming and search to shopping. What are the antitrust cases filed against Google and how they can change the online world.
Why Google has been fined 1338 crores
CCI considered two ways of doing business of Google wrong-
1) Pressure to make Google Pay the default payment system for every app
Google had put pressure on every app published on its Play Store to process every payment related to the app through Google’s payment platform Google Pay. This every in-app purchase should be done through Google Pay. App publishers objected to this. The CCI also admitted that this pressure is wrong. Due to this, app publishers are not able to tie-up with other payment platforms despite getting better deals. At the same time, it was seen as a means of unfairly suppressing other payment platforms and creating a monopoly in the market.
2) Compulsory bundling of Google apps on Android
Google’s Android mobile operating system is the most widely used mobile OS in the world. Google had put pressure on phone makers to include Google’s apps (Google Search, YouTube, Chrome etc.) by default on every new phone. They would have been allowed to use Android on this condition. The CCI also considered this to be wrong. This was creating a monopoly of Google’s apps on Android phones. For companies like Samsung, which also give their search engines to users, this condition was increasing the difficulties.
Because of Google’s large market share in mobile OS and Internet search, its dominance doesn’t just go to app developers and mobile makers. News broadcasters have also accused Google of bullying. So far, three complaints related to this have reached the CCI. The latest of these was done only on 6 October. The CCI has started its investigation by merging all these complaints together. The investigation started in 2019 on the first complaint related to Google Pay and Android app bundling. The verdict came in 2022. The investigation on the complaint of news broadcasters has started in 2021. It is believed that by next year, problems may arise for Google again.
what is the complaint of news broadcasters with Google
In exchange for publishing their web links on Google’s search page, news broadcasters have to provide their content to Google. On the basis of this content, Google has started its different services Google News, Google Discover and Google Accelerated Mobile Pages. Google is earning through these services, but news broadcasters are not being given their fair share in this earnings. Google decides on its own which news will be shown above in the search. Google News’s news aggregation method raises doubts. If news broadcasters want to take advertisements in their content, then they have to do so only through Google’s exchange. Google puts pressure that if anyone wants to show their content on Google’s search page, then they will have to take ads from Google’s own exchange.
Through this rule, Google continuously controls the number of ads and the earnings from them.
Government’s strictness not limited to just Google
Whether it is a matter of maintaining healthy competition in the world of internet or keeping an eye on tax evasion of online companies… the government has increased strictness in everything. Understand the gravity of the situation from two recent cases-
1) MakeMyTrip ties up with Oyo… harms the rest of the hotel aggregators
The latest decision of CCI has come against MakeMyTrip and Oyo on October 19 The Federation of Hotel and Restaurant Associations of India (FHRAI) along with online hotel aggregators FabHotels and Treebo had filed complaints with the commission. His complaint was that both MakeMyTrip and its acquired platform Go-ibibo together are India’s largest online hotel search and booking platforms. Both of them had a deal with hotel aggregator OYO. Due to this deal, Fabhotel or Treebo-affiliated hotels were not being listed on MakeMyTrip and Go-ibibo platforms. It is against the rules of competition. Not only this, FHRAI said that the conditions imposed on them for listing of MakeMyTrip hotels have a negative effect on the business. FHRAI said that MakeMyTrip collects processing fees from customers in the name of hotels, but hotels do not get a share in it. Also, they have a condition that hotels on any other platform cannot give a price less than the price of a hotel room on MakeMyTrip. Hotels who wanted to opt out of the online platform were not removed from the list, but were given their search results with answers like SOLD OUT or NO ROOMS AVAILABLE. CCI has ordered MakeMyTrip to change the rules with immediate effect. Along with this, it has also been asked to pay a fine equal to 5% of the annual turnover of MakeMyTrip and Go-ibibo which amounts to Rs 223.48 crore. CCI has imposed a penalty of 5% of its annual turnover on Oyo which works out to Rs 168.88 crore.
2) GST evasion notice of 21 thousand crores to Gamescraft
In September, the GST department served India’s largest real money gaming company, Gamescraft, a notice of GST evasion of Rs 21,000 crore. Gamescraft Company runs gaming apps like Rummy Culture. Users on these platforms can win or lose real money through these games. The company, which started 4 years ago, has denied the allegation of tax evasion of 21 thousand crores and said that its total revenue till now is 1900 crores. According to the department, less than 1% of the money transactions made by Gamescraft on its platform have given receipts to the users. That is, more than 99% of the company’s transactions are done without receipt, which can be considered as GST evasion. The company says that 99.5% of its transactions were of Rs 200 or less and receipt is not required for these. But this claim of the company does not match with the claim of its total revenue. Think of it like Gamescraft’s most popular app is Rummy Culture, which has around 20 million users. If there are transactions of Rs 200 from all these users in a year, then only this app earns 400 crores, while the earnings figures of the company released in 2021 show that the company earned revenue of Rs 1422 crores. The GST department has now prepared for action against Gamescraft as well as other real money gaming companies.