CCI Publishes its Approval of Google’s Acquisition of 7.73% Equity Share Capital in Jio Platforms

On November 11, 2020, CCI approved the acquisition by Google international LLC (‘Google’) of approximately 7.73% of the equity share capital in Jio Platforms Limited (‘Jio Platforms’), a subsidiary of Reliance Industries Limited (‘RIL’).  The transaction involved Google receiving certain affirmative and information rights in Jio Platforms, along with the right of representation on Jio Platform’s board. [1] 

The transaction also involved a Foundational Commercial Agreement (‘FCA’) between Google and Jio Platforms. The FCA envisages a strategic tie-up between the parties to collaborate on the development of a new low-cost smartphone (‘New Smartphone’) and operating system (‘Customised OS’) for such devices.

CCI ruled out any competition concerns arising from horizontal overlaps between the parties for the following reasons:

i.       Online Advertisement Services: CCI noted that Jio Platforms has an insignificant presence in this space.

ii.    Apps and Mobile/Web Services: CCI noted that while the parties’ have similar applications in the domain of services such as, mobile browsers, payment services, and video streaming services, either their combined market share was less than 30%, or the incremental share was negligible. CCI also noted that these markets are characterized by multi-homing and ease of switching.

iii.   Mobile Operating Systems: CCI examined whether the proposed business collaboration is likely to reduce the incentive for Reliance Retail Limited (‘RRL’) to continue selling mobile devices implementing KaiOS. CCI concluded that competition concerns are unlikely, because the parties confirmed RRL would continue to sell KaiOS phones and would not degrade the quality of these phones to favour the new smartphone.

CCI also examined the business collaboration contemplated by the FCA and did not find any competition concerns because:

i.     The smartphones to be supplied pursuant to the collaboration are yet to enter the market, and the market is competitive with the presence of several known players like Samsung, Vivo, Xiaomi Oppo, and Lava.

ii.    The market position of the parties and resultant smartphones to be launched under the business collaboration are not significant to raise any competition concern.

iii.   The nature and scope of the collaboration does not incentivize Google to reduce its user base for Android, e., foreclose competition or increase rivals’ cost by denying Android to third-party OEMs.

CCI also confirmed that the transaction is unlikely to affect competition from the perspective of net neutrality and data integration:

i.     Net Neutrality: CCI considered whether the transaction would lead to any preferential treatment to Google applications or content in RJIO’s network. It did not identify any concerns because (i) the transaction only represents a minority acquisition; and (ii) there are telecom regulations that govern net neutrality obligations of telecom service providers in India.

ii.    Data Integration: CCI noted that the proposed transaction only represents a minority acquisition and may not result in unrestricted access to each other’s resources including user data. It also observed that the competitive effects of any data sharing could be evaluated under the behavioural provisions of the Act.

CCI accordingly approved the transaction.

[1] Combination Registration No. C-2020/09/775.

Published In:Inter Alia Special Edititon - Competition Law - April 2021 [ English
Date: April 29, 2021