Anti-competitive practices online

In October 2024, 2 cases against Google for abuse of dominance were adjudicated in the US. In South Korea, it is proposed to regulate the risks of abuse of platforms due to sellers' untimely settlements.

The US experience

In the first case, the attorney generals from all states and the DOJ issued a statement about Google's abuse of the search text advertising services market in the United¹ States. Google's search engine, where advertisers spend up to $80 billion a year, has a 90% market share.

Google made exclusive agreements with browser developers (like Apple, Mozilla) who must “by default” install Google search in their browsers in exchange for a share of Google's search advertising revenue. Similar agreements were made with Android device manufacturers (like Samsung) - it was forbidden to pre-install search engines other than Google on devices.

In October 2024, state attorney generals proposed legal protections against the influence of Google's monopoly. It is proposed to restrict Google from entering into such agreements.

The second case, pending in October 2024 against Google, originated back in 2020 when Epic Games (game and entertainment developer) filed a complaint against Google for market abuse.

Google forced consumers and app developers to use its own Google Play. Google also signed agreements with Android device manufacturers to give Google preferential treatment - the manufacturers placed the Google Play on the “home screen” of each device and pre-installed 30 more Google apps on each user's mobile device. In exchange, manufacturers were rewarded with a percentage of sales from users' use of Google apps.

App developers could not sell apps and content directly from their own website or from another app store - only through Google Play if they wanted to have access to other Google services (advertising, search, YouTube). Google also required the use of its own payment tool, Google Play Billing, for transactions with consumers within downloaded apps, imposing a 30% fee on transactions, which is 10 times higher than other payment solutions.

As a result, in October 2024, the District² Court of California issued an injunction. Google has been enjoined for 3 years to:  Share revenue from the Google Play with manufacturers on Android as a condition of pre-installing Google services.  Restrict the ability to update apps that are downloaded from stores other than Google

Play or from the developer's website.  Restrict (including through commissions) the use of payment tools other than Google

Play Billing.

Google should provide the option to put other store apps on Android.

Experience of South Korea

In October 2024, proposed amendments to the Fair Transactions in Large-Scale Retail³ Business Act to limit abuses by «large»⁴ platforms in settlements with merchants.

It is proposed to establish that if a large platform manages payments for the sale of vendors' goods (services) on the platform, or payments are managed by the financial institution designated by the platform, settlements with vendors as a result of sales should be made within 20 days from the date of confirmation of the purchase. Platforms should place at least 50% of the proceeds from vendor sales in separate financial accounts or through payment guarantee insurance to safeguard funds received from buyers.

This reduces the abuse of platforms related to delayed payments to sellers.

Russia’s experience

In 2015, FAS Russia conducted an investigation (similar to the US one) against Google Play abuses in 2015, when Yandex complained that Android phone manufacturers refused to pre-install the Yandex.Kit operating system. Google restricted in its agreements with manufacturers the option to pre-install alternative applications.

FAS recognized Google's practice of “product bundling” (i.e. mandatory preinstallation of a set of Google services when installing Google Play in Android phones) as abuse. The fine for non-compliance with the FAS warnings was Rb0.5 million.

As for the possibility in Russia to restrict abuse of platforms by delaying settlements with sellers (Korea's practice), such an initiative could be included in draft laws to regulate marketplaces, or in competition legislation.

From the monitoring issue No. 10, October 2024. Download the full issue (PDF) · issue page at the Gaidar Institute