Smartphone makers plan to discuss CCI notice on deals with Google

Major players such as Samsung, Xiaomi, and Lava have been asked to provide details of their deals with Google
Leading smartphone makers operating in the country are planning to adopt a concerted strategy after the Competition Commission of India (CCI) sought details of their business deals with software giant Google.

 

Major players like Samsung, Xiaomi and Lava, which have been served notices seeking details of their deals with Google, are currently undecided on how to respond. According to sources, since the CCI has sought details of many of their internal business operations, handset makers are in a state of confusion.

 

Given the gravity of the matter and Google’s importance for sustenance of their businesses, smartphone makers are meeting this weekend. Apart from finding a common line of reply, the meeting is being arranged to discuss a possible concerted strategy to face the situation before the statutory body.

 

The sources said industry body Indian Cellular Association, headed by Pankaj Mohindroo, is trying to bring all major players under one roof. Hari Om Rai, chairman of Indian handset firm Lava International, too, is actively working to resolve the issue.

 

One of the key issues that the CCI is probing is whether Google takes advantage of its dominant market position and force manufacturers to pay for its applications. Handset firms that Business Standard spoke with said Google does not charge a royalty for its basic Android mobile operating system.  “We always use stock Android and we rather get paid by Google for using the same in our devices,” said the top executive of a leading smartphone maker. However, he said that the company is currently figuring out how to respond to the CCI notice given that the fair trade watchdog has asked for many details about the firm’s internal operations that are highly confidential.

 

The top executive of another leading mobile company said: “Google does not charge any royalty for the operating system but it asks for some kind of revenue share if you offer value-added services on its platform.”

 

According to another senior executive, Google’s business model thrives on the factor that the more people use its software, the more revenue opportunities open up. “It earns a large chunk of its revenue from advertisers, which directly depend on how many screens their ads reach.”

 

However, many handset makers expressed concerns that in future Google may start charging them for its applications and operating system. In the absence of any suitable alternative to Google’s vast ecosystem of mobile apps, local mobile players would have no option but to bend to the rules set by the American software giant.



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