Google’s big India opportunity faces a challenge



  • A ruling by India’s Supreme Court will force tech giant to make changes in the largest market for its Android operating system

India wants to tame big tech’s dominance and it has its antitrust sights on Google. The giant company will be a tough nut to crack.

Last week, Google lost an appeal in India’s Supreme Court to block an antitrust order that requires it to make significant changes to the way its Android operating system does business with smartphone makers, app developers and users. It strikes at the company’s core business model for Android and may force the technology giant to alter its approach in its largest market.

In October, the country’s antitrust watchdog fined Google the equivalent of $162 million for allegedly abusing its dominance of the Android ecosystem and ruled in favor of unbundling its apps from its open-source operating system. India’s antitrust remedies, influenced by a similar case in Europe back in 2018, are far more stringent and the scale of change required is much larger. Google said it is reviewing the details of the Supreme Court’s decision and will cooperate with the antitrust agency on the way forward, in parallel with its appeal.

India has 600 million Android users, the most in the world, with another 200 million to 300 million expected by 2027, according to Counterpoint Research, making the government’s push pivotal. Unlike in China and Europe, India’s population is still growing and quite young. However, Europe’s precedent shows the difficulty of actually inflicting any serious harm to Google’s dominant position and turbocharging vibrant competition, at least in the near-term. The impact of the ruling on the region’s competitive climate is still to be seen as most smartphone makers need to offer Google’s products to remain competitive, and no strong alternatives have yet emerged.

According to Geoff Blaber, chief executive at CCS Insights, the change in regulatory temperature is arguably 10 years too late. He believes that Google has built such a strong position and demand for its services is such that the impact has been far more limited than it would have been were it introduced much earlier. According to Statcounter, a website analytics company, Google’s search-engine market share has stayed pretty much the same globally since the beginning of 2018.

Some Indian app developers have rejoiced at the court’s decision, but the task ahead is daunting if they want to compete with Google’s formidable apps such as Google Maps. For one, it will involve millions of dollars in marketing spending and investments in product development.

For years, Google subsidized Android’s development costs by pre-installing Google Chrome and its search app. It funneled 96% of smartphone users in India to its own browser and search engine that fuel its advertising machine. Until now, Android has been distributed practically free of charge to smartphone makers. In 2018, Google said it would introduce a new paid licensing agreement for its apps on Android smartphones and tablets shipped into the European Economic Area while keeping the operating system free and open source. It might have to do something similar in India.

Neil Shah, vice president of research at Counterpoint Research, believes that, if Google implements all the required changes in India, the Android ecosystem will either begin to look a lot more like Microsoft’s license-based Windows ecosystem, or much like Apple, if it decides to become vertically integrated with a closed ecosystem.

India’s huge and growing market might seem like the natural place to rein in Google’s dominance, but don’t expect the latest ruling to be a magic bullet for digital competition.

This story has been published from a wire agency feed without modifications to the text

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