Ercüment Erdem Att. Elif Mungan

Following the Commission’s Decision, the Turkish Competition Board also Fined Google

October 2018

Introduction

Following the European Commission’s (“Commission”) Google decision concerning Android mobile devices, the Turkish Competition Board (“Board”) also rendered a similar decision. On 18 July 2018 the Commission fined Google €4.34 billion on the grounds that Google has imposed illegal restrictions on Android device manufacturers and mobile network operators to cement its dominant position in general internet searches[1]. In addition to the fine, the decision requires Google to end its illegal conduct within 90 days from the date of the decision, or bear penalty payments. Thus, the Commission has come to an end of a three-year examination, thereby creating an important precedent for other authorities around the world. In its decision dated 19 September 2018, the Turkish Competition Board (“Board”) has fined Google LLC, Google International LLC, and Google Reklamcılık ve Pazarlama Ltd. Şti. (“Google Economic Unity”), severally, 93,083,422.30 TL, on the grounds that Google Economic Unity breached the abuse of dominance rules set forth under Article 6 of the Act on Protection of Competition No. 4054 (“Competition Act”) by imposing illegal restrictions on device manufacturers[2]. The decision also requires Google Economic Unity to modify its contracts with device manufacturers in line with the Board’s decision, and notify the Competition Authority of such modifications within 6 months from the notification of the reasoned decision.

Commission Decision

The Commission has determined that Google is dominant in the markets for general internet search services, licensable smart mobile operating systems and app stores for the Android mobile operating system.

In its decision, the Commission has defined Google’s illegal actions, as follows:

  • Illegal Tying of Google’s Search and Browser Apps: According to the decision, Google required manufacturers to pre-install the Google Search app and browser app (Chrome), as a condition for licensing Google's app store (the Play Store).
  • Illegal Payments Conditional on Exclusive Pre-installation of Google Search: According to the decision, Google made payments to certain large manufacturers and mobile network operators on the condition that they exclusively pre-installed the Google Search app on their devices.
  • Illegal Obstruction of Development and Distribution of Competing Android Operating Systems: According to the decision, Google has prevented manufacturers that wanted to pre-install Google apps from selling even one single smart mobile device running on alternative versions of Android that were not approved by Google ("Android forks").

The Commission has concluded that the three abuse forms listed above are parts of Google’s strategy of cementing its dominant position in the general search engine market. The effects of the relevant strategy are listed in the decision. According to the decision, firstly, the illegal practices obstruct rival search engines’ ability to compete. Secondly, the tying practices ensured the pre-installation of Google's search engine and browser on practically all Google Android devices, and the exclusivity payments strongly reduced the incentive to pre-install competing search engines. In addition, Google hindered the development of Android forks. Furthermore, Google’s strategy obstructed other search engines from collecting more data from smart phones, and that enabled Google to strengthen its dominant position as a search engine. Lastly, the Commission evaluated the effects of Google’s practices in the wider mobile space, since these illegal practices have prevented other mobile browsers from competing, effectively. Similarly, Google’s limitation with regard to Android forks, which has obstructed other platforms’ development, has negated other app developers’ ability to thrive.

Board Decision

Although the reasoned Board decision has not yet been published, the Board’s press release is indicative in terms of the grounds for the decision.

In line with the Commission decision, the Board has also determined that Google Economic Entity is dominant in the market for “licensable smart mobile operating systems.” The Board did not define “general internet search services” and “app stores for the Android mobile operating system” markets in the Turkish market.

Google Economic Entity’s illegal actions that have been fined in the Board decision are mainly with regard to the illegal tying of Google’s search apps. According to the decision, the implementations Google employed that have been found to be illegal, are as follows:

  • According to the Mobile Implementation Distribution Contracts signed with the manufacturers, Google search shall be the “default search engine,” and the Google search engine shall be the “homepage.”
  • Google Webview shall be the default, and the only component for the relevant function.
  • According to the Income Share Contracts, the Google search shall be exclusively downloaded into the devices.

The Board stated that the other Google implementations set forth under Mobile Implementation Distribution Contracts are not in breach with Article 6 of the Competition Act. On the other hand, in order to provide publicity and avoid the future possible competition concerns for the contractor device manufacturers, the Authority presidency is to send an opinion letter to the Google Economic Entity regarding the inclusion of an explicit article into the Mobile Implementation Distribution Contracts, stating that the pre-installation of rival apps and implementations, along with Google apps, are not restricted.

According to the decision, Google Economic Unity shall also modify its contracts with device manufacturers in line with the Board’s decision.

Conclusion

The press release of the Board decision indicates that the main illegal action determined in the Turkish case is the illegal tying of Google Economic Entity’s search apps. The Google Economic Entity’s actions have been found to be illegal, since it ties its Google search apps to its services in the licensable smart mobile operating systems market.

Consequently, Google’s fined implementations are similar in the Commission and Board decisions; however, the Turkish press release is not sufficient to assist us in comparing the relevant decisions; for example, the press release does not address whether Google Economic Entity has made illegal payments to be conditional on exclusive pre-installation of Google Search, as it is so determined in the Commission decision. In any event, both of the Authorities determinations of illegal actions overlap, and we will be able to finalize the full comparison after the reasoned decisions are rendered.

[1] http://europa.eu/rapid/press-release_IP-18-4581_en.htm (Access date: 18.10.2018).

[2] http://www.rekabet.gov.tr/tr/Guncel/google-llc-google-international-llc-ve-g-e89449b5dbbce81180e300505694b4c6 (Access date: 18.10.2018).