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Google vs Competition Authority

Google is an economic entity made up of Google Inc, Google International LLC, and Google Advertising and Marketing Limited. 

On 10 July 2015, Limited Liability Company Yandex (YANDEX) applied to the Turkish Competition Authority regarding the contracts signed by Google with original equipment manufacturers. 

The application states that Google, with contracts, requires equipment manufacturers to pre-install Google application services on their devices. In this way, Yandex indicated that Google gains privileged placement of its applications.

With contracts, Yandex stated that equipment manufacturers must use “Network Location Provider” as a location provider, and thus Google applications are connected. 

Yandex also argued that manufacturers receive a share of the revenue from Google-Search engine ads or searches within applications and that competitors are excluded with revenue-sharing agreements. 

Preliminary Investigation 

Upon this application, the Competition Board conducted a preliminary investigation to determine whether Google’s behavior and contracts regarding the provision of mobile operating systems and mobile applications and services violated Articles 4 and 6 of the Law on the Protection of Competition.

As a result of the preliminary investigation;       

 1)- Under Article 41 of Law on the Protection of Competition, there is no need to open an investigation at this stage, 

2)- Giving an opinion to Google regarding removing the provisions in the ‘Mobile Services Distribution Agreement’ that Google has concluded with the original equipment manufacturers, which stipulate the exclusive pre-loading of specific applications within the Google Mobile Services to mobile devices and to terminate the related applications. The appointment of the Headship for, 

Yandex filed a lawsuit for a stay of execution of the decision not to open an investigation. The court decided to annul the Board’s decision.

Re-evaluation of preliminary investigation

Following the court decision, the Board reconsidered the Preliminary Investigation Decision. As a result of the evaluation, it decided to initiate an inquiry against Google. The Board imposed an administrative fine of 93,083,422,30 Turkish lira and some obligations on Google (decision dated 19 September 2018 and numbered 18-33/555-273).

In this decision, the Board stated that the conditions for other Google applications uploaded to the other party in Mobile Application Distribution Agreements do not constitute a violation within the scope of the Law on the Protection of Competition. However, the Board decided to submit an opinion letter to Google to avoid competition concerns. The opinion letter includes introducing an explicit provision to all Mobile Application Distribution Agreements that Google applications and competitor applications are not blocked from being installed on the device.

The obligations imposed on Google

The obligations imposed on Google to end the violation and to ensure the establishment of effective competition in the market are as follows:

– Device manufacturers may want to use Commercial Android Operating System on their devices offered for sale in Turkey. From the agreements made by Google with device manufacturers, the obligation to remove the provisions that directly/indirectly regulate or imply the responsibility of installing the Google search widget on the home screen.

– Securing the right of device manufacturers to choose the provider of the search widget to be placed on the main screen, Google or its competitors, and establishing the freedom of device manufacturers to put the search widgets other than Google alone on the main screen. 

– The terms for assigning Google search tool by default to all search access points included in the current design structure and included in the contracts are provided as a condition for licensing. Removing these requirements and not introducing new obligations regarding the default assignment of Google search to all search points that may arise due to design choices.

– Obligation to remove the contractual provisions from the contracts, which regulate the obligation to install the Google Webview component as the default and in-app internet browser, or point directly or indirectly to this obligation. Google asserts these provisions as a condition for licensing.

– Failure to provide financial or other incentives in a way that will result in prohibited consequences with the obligations listed above. 

– Google imposes obligations on device manufacturers that competitors of the Google search tool cannot be installed and use products that compete with the Google search tool in any of the search points on the devices. The obligation to remove these obligations has been imposed on all existing agreements, especially on Revenue Sharing Agreements.

This decision was communicated to Google on 6 February 2019. 

Google, presented the final harmonization package on the subject on 26 July 2019, and  sent additional information to the compliance package with the letter dated 6 August 2019. 

Competition Authority understood that the harmonization package was insufficient to meet the stipulated obligations.  

The institution, which could not reach the meeting quorum due to the members whose term of office had expired, could not decide as of the date of presentation of the harmonization package. Since the Competition Board had the decision-making power on 2 November 2019, Authority agreed to evaluate the harmonization package on 7 November 2019. (Decision of the Competition Board dated 7 November 2019 and numbered 19-38/577-245) 

Since the final compliance package offered by Google did not meet the obligations, the Board decided on a daily fine of 1,241,373.29-Turkish lira for the period from 7 November 2019 to the fulfillment of the obligations. This amount is five per ten thousand of Google’s 2018 turnover in Turkey.

A revised compliance package was presented to the administration on 6 January 2020 after the decision of Google to impose a temporary fine. Upon examining the revised compliance package, Authority determined that Google fulfilled the obligations stipulated. 

Based on this determination, the board calculated the fine from 7 November 2019 to 6 January 2020. (Decision dated 9 January 2020 and number 20-03/30-13, 60 days x 1,241,373.29 = 74,482,397.40 Turkish lira)

Google has filed a lawsuit for the annulment of this decision

According to the Competition Board Decision dated 9 January 2020 and numbered 20-03/30-13; 

– When the Board examined the license agreements offered with the compatibility package, it found no binding provision for the manufacturers regarding the Google Search widget. However, it has been determined that a separate contract has been prepared for the Google Search widget. With this contract, it is left to the initiative of the device manufacturers to place this widget on their devices for a certain fee. Given Google’s strength in the search market, it is reasonable for device manufacturers to accept this agreement and install the Google Search widget on their device’s screens. 

Even if the device manufacturers agree to install the Google search widget on their devices with this contract, there is no obstacle to installing competitor search widgets on the same machine. In other words, in the current situation, device manufacturers who want to get a license from Google do not have to install the Google search widget on the home screen with privilege. 

Device manufacturers are in a position to negotiate with both Google and other competing search thread providers and generate revenue in both cases. 

Considering the screen sizes of the devices, the area occupied by the search widgets, and the freedom of choice of manufacturers and consumers, it has been determined that there is no technical obstacle in terms of having two or more search widgets on the same screen. 

– It has been determined that there is no provision regarding the assignment of Google Search points by default in the current version of the contracts.

However, with some provisions, it has been determined that a folder containing Google applications and the Google Playstore application icon are placed on the home screen. 

– It has been determined that Google has removed the obligation to assign the Webview component by default. However, a provision has been made that other default in-app web page converters also offer as much security as Google’s Webview component. For the safety of users, the condition has been found reasonable by the Board. 

In summary, it has been determined that the issues presented as a condition for licensing in the agreements made with the device manufacturers who want to obtain a commercial Android Operating System license have been removed from the contracts.

Revenue sharing agreements have also been examined. In terms of these contracts, it has been determined that the obligations have been removed from the contracts. 

Device manufacturers are required to set the Google Chrome browser as the default browser on their devices in order to be eligible for revenue sharing.

It has been concluded that these conditions are not contrary to the obligations imposed on the Revenue Sharing Agreements by the Board decision. 

Judgment

In the annulment lawsuit filed by Google against the board decision, it was determined by the court that Google complied with the obligations brought by the Competition Board’s decision, with the compliance proposals submitted to the Agency’s records with the letter dated 6 January 2020.

The court also ruled that the part regarding the fine was in accordance with the law and legislation.

It was decided to reject unanimously the annulment action filed by Google against the board decision containing the fine decision. (on 18 October 2021)