Competition in digital markets raises a lot of issues that regulators from all over the world must address. Kazakhstan along with other the Eurasian Economic Union member states also has to cope with the issue.
In March 2021, Yandex, a well-known Russian IT company, filed an application to Kazakhstan’s Agency for Protection and Development of Competition (APDC) accusing Google of a monopoly on the market. According to Yandex, the American giant aggressively promotes its services on Android devices while blocking services from other companies.
As Marat Omarov, deputy head of APDC told the Kursiv edition, this case is still under review. First of all, the agency is going to examine what other countries have done to protect free competition in the mobile apps market.
«Currently, we are working together with some international organizations and trying to find out how we can respond to the complaint filed by the foreign company,» he said.
According to a preliminary analysis of the situation on the domestic market the agency has conducted, Google thrives in Kazakhstan thanks to factory-applied mobile apps. The methodology of the analysis wasn’t approved yet though. It would require adopting new legislation that could take several months. However, there are some solutions, which have been successfully applied by some other countries.
European Commission is the first agency to face the challenging situation with Google. In 2013 Fair Search alliance, which includes Microsoft, Nokia, Oracle, Expedia and Tripadviser, has filed a complaint against Google. They accused the search giant of blocking their apps on Android devices.
The commission has found that Google forced mobile device makers to apply Google Chrome and Google Search to their devices on default. If a maker tried to refuse to comply with the company’s demand, Google blocked its access to Google Play service. At the same time, the giant also prohibited producers from selling devices with open code Android. On top of this, Google had been paying those smartphone makers, who were willing to refuse to work with Google’s competitors.
As a result, in 2018 Google was fined by the European Commission for $4.3 billion due to abusing its dominant market position.
Google was ordered to stop pushing producers and the company should not prevent mobile device makers from cooperating with other software developers. Moreover, Google was forced to change an entire license model for its products. Google Play, Google Chrome and Google Search each received separate licenses even though later this move has been recognized as ineffective. Thus, officially, smartphone producers can get a license for the mobile apps store with no need to install the browser or search engine. However, in reality, they can’t do that because Google charges them if they want to get a pre-installed Google Play only. But when a smartphone maker installs Google Chrome and Google Search, Google won’t charge that company for Google Play installation.
In Europe, consumers can choose which browser they are willing to see on their brand-new devices. A nice idea at the initial stage, it was implemented in a bad way when the so-called selection window has been based on the auction model. The problem is caused by Google itself, which has left no space for other industry players. They have no big financial resources to get a win in such an auction. Software developers should pay whenever users choose their browser even if they discard it immediately.
In 2021 Germany has decided to make all players of the digital market equal and to limit that tremendous advantage of Google. The idea is to prevent dominant players from pre-installation of their apps if other players can’t do so either. German authorities want local companies to have the same access to the platform as Google.
In 2014 such small producers of smartphones as Explay, Prestigio and Fly refused to extend a contract with Yandex because of pressure from Google that sought to get rid of its competitor. The tech giant demanded smartphone makers install Google Play along with other Google apps and put their icons on the screen in a proper order. At the same time, Google wanted producers to not cooperate with Yandex or other third-party developers. Yandex didn’t accept that and filed a complaint to the regulator.
In 2015 the Russian Federal Antimonopoly Service (FAS) ruled that Google had broken the law and obliged the company to change its policy and notify all the customers that they can replace Google Chrome with any other apps if they want.
Google had tried to appeal the decision but failed. Eventually, the giant agreed to pay $6.8 million in fines and to stop its practice of pre-installing apps on Android devices. The company also promised to not prevent competitors from being on the platform and lure smartphone makers with incentives to pre-install Google Chrome on their devices.
The selection window was also a part of that deal but compared to the European variant, it was different. When a device is being activated for the first time, Google asks a user what search system he or she wants to use. In Russia, the selection window includes the most popular in the country search engines such as Yandex and Mail.ru.
As a result, FAS has created equal conditions for all players of the Russian digital market. At the same time, local consumers received a choice. No new legislation was required because FAS used the current law for the protection of market competition.
Turkish authorities investigated several accusations against Google including Android software. In April 2021 the antimonopoly agency of the country put a $36.6 million fine on Google for abuse of domination on the market. The authorities have found that Google was biased when working with local services designed to find accommodation because it had been focused on promoting its own app. Now the company is obliged to make its conditions the same for all these services within six months. Moreover, the regulator will review Google’s progress on the issue during the following five years.
There were several cases against Google in the U.S. last year even though the antimonopoly investigation cases tend to drag on, which is a common problem for the U.S. and Europe as well. However, regulators have everything needed to speed up the process. For example, the U.S. Senate had scrutinized the activity of such IT giants as Amazon, Apple, Facebook and Google and prepared a 400-page report. The U.S. Senate judiciary committee said that Google has dominated the market of search engines and ads. The investigators found that the company had been tracking data in real-time all over the world. The key feature that has helped Google to reach a dominant position is the pre-installation of its browser on all Android-run devices. As a result of the investigation by the Senate, several U.S. states raised claims against Google.
The deal between Google and Apple that has made it possible to install the Google Search app on iPhones and other Apple devices on default is the biggest issue scrutinized by the U.S. Department of Justice. It turned out that Google has been paying Apple billions of dollars to persuade the mobile device maker to pre-install its search engine.
What Is Going to Happen in Kazakhstan?
Abuse of digital competition by foreign IT giants is a bothersome factor for many countries but not all of them have proper legislation. In some cases, the creation of a legal base for the market requires much more time than the development of new technologies. However, every modern state has to protect local markets from foreign monopolies.
«We have to embrace all sorts of competition because it helps to make progress and has a positive impact on the final user. But we have to make sure that big corporations won’t abuse their power; everything should be clear and transparent,» said Vadim Lyu, founder of digital agency IBEC System.
Currently, a third-party developer can face some obstacles if it wants to promote its services on Google’s platform, the expert added.
Roman Nadeyin from Rocket Firm digital agency agrees. Without pre-installed Google services, local mobile apps developers might feel much better, he said.
«It would be better to see demand for certain apps within search requests or Google Play. This would be a great opportunity for small studios, developers and startups, who can offer some alternative to the current services. Probably, they would be able to save some money they have to spend on marketing and to focus more on the products’ quality. It will be good for users,» he said.
Kazakhstan has already got some antimonopoly legislation and this might be enough to create a basis for fair competition in the digital market within the country. If the government achieves this goal, it might support local developers and users. Given that Kazakhstan’s antimonopoly agency requested some help from its foreign colleagues, it seems that the decision will not drag on.