Google International LLC, — Combination C-2022/03/913

COMPETITION COMMISSION OF INDIA

Non-Confidential 30.06.2022 Notice under Section 6(2) of the Competition Act, 2002 filed by Google International LLC

CORAM:

Mr. Ashok Kumar Gupta Chairperson

Ms. Sangeeta Verma Member

Mr. Bhagwant Singh Bishnoi Member

Order under Section 31(1) of the Competition Act, 2002

1. On 09.03.2022, the Competition Commission of India (Commission) received a notice under Section 6(2) of the Competition Act, 2002 (Act). The notice has been filed by Google International LLC (Acquirer) in relation to its proposed investment of approximately 1.28% of the equity share capital of Bharti Airtel Limited (BAL/Target) (Proposed Investment). Hereinafter the Acquirer and BAL are collectively referred to as “Parties”.

2. The notice is given pursuant the Investment Agreement (IA) executed between Acquirer and BAL dated 28.01.2022. It is mentioned that along with the Proposed Investment, the Parties have also agreed to enter into certain collaborations, viz, (i) a Co-Marketing Agreement and the Cloud Agreement (together, “Commercial Deals”); and (ii) certain Future Commercial Arrangements.

Combination Registration No. C-2022/03/913

3. The Commission, vide its letter dated 25.03.2022, issued under Regulation 14(3) of the Competition Commission of India (Procedure in regard to transaction of business relating to combinations) Regulations, 2011 (Combination Regulations), required the Acquirer to remove certain defects in its notice as well as furnish certain additional information. Response to same was received on 01.04.2022. Since response to the said letter and the information filed in the notice continued to have certain deficiencies, letters were issued on 04.04.2022 and 09.05.2022 in continuation of the letter dated 25.03.2022. The responses to the same were received on 22.04.2022 and 11.05.2022, respectively. Subsequently, the Parties provided certain further clarification(s)/information(s) for the purposes of competition assessment on 17.05.2022 and 18.06.2022.

Parties to the Proposed Combination

4. The Acquirer is incorporated as a limited liability company under the laws of Delaware, USA. It is a wholly owned subsidiary of Google LLC (Google LLC collectively with all its subsidiaries is referred to as „Google‟) and is ultimately owned by Alphabet Inc. The Acquirer is a holding company and does not own or operate any Google products or services. Google's key products and services include Chrome, Gmail, Google Cloud Platform, Google Drive, Google Maps, Google Play, Android, Search, YouTube and Google Ads.

5. The Target is incorporated as a limited liability company under the laws of India. It is a global communications solutions provider. Its retail portfolio includes, amongst others, high-speed mobile broadband, Airtel Xstream Fiber, streaming services (music and video), digital payments, and financial services. It is stated that, for enterprise customers, BAL offers solutions including secure connectivity, cloud and data centre services, cyber security, IoT, advertising, and cloud-based communication.

Proposed Combination

6. It is submitted in the Notice that, pursuant to IA, the Acquirer has agreed to invest, INR 5,224.38 crores in the Target in consideration for the issuance and allotment of equity shares representing a non-controlling stake of 1.28% of the Target‟s equity share capital (Proposed

Combination Registration No. C-2022/03/913

Investment). It is also submitted that the [………………………………………..………….. …………………………………………………………………………………….. ……… ……………… …………………………………………………………………………….….. .… ………….]

7. Further, it is mentioned that, along with the Proposed Investment, the Parties have also executed: (i) the Co-Marketing Agreement1; and (ii) the Cloud Agreement2.

(a) Under the Co-Marketing Agreement, Google and BAL (including its affiliates) will run a co-marketing campaign to promote the sale of mobile phones in India and make it more affordable for users. It is submitted that BAL and its affiliates will undertake certain marketing activities, including cost reduction programs designed to give Indian consumers better access to mobile devices. [………………………………………..… ……….. …………………………………… ……………………………………………….. ……… ……………… …………………………………………………………………………….….. .… ………….]

(b) Under the Cloud Agreement, Google will provide BAL and its affiliates cloud services. It is mentioned that, under this agreement, Google will provide cloud services, including computing, analytics, storage, databases, and networking to BAL. Further, it is stated that the Cloud Agreement will enable BAL to use Google‟s highly innovative cloud services for its business and achieve greater efficiencies and address complex business challenges on a non-exclusive basis. The proposed Cloud Agreement will result in a supplier/customer relationship between Google and BAL (and its affiliates).

Hereinafter, the Co-Marketing Agreement and the Cloud Agreement that accompany the Proposed Investment are together referred to as “Commercial Deals.”

1 It is stated that certain affiliates of the Acquirer and the Target have entered into a co-marketing agreement (Co- Marketing Agreement) through which Google will fund the programs and marketing activities of BAL and its affiliates to make mobile phones more affordable for users in India. 2 It is stated that certain affiliates of the Acquirer and the Target have entered into an agreement under which affiliates of the Acquirer will provide certain cloud services to the Target and/or its affiliates (Cloud Agreement).

Combination Registration No. C-2022/03/913 (c) In addition, it is mentioned that the Parties themselves, or through their affiliates, intend to enter into certain Future Commercial Arrangements. However, the Parties have not agreed upon any details in relation to these arrangements, including scope, product segments, and nature of these arrangements. It is also mentioned that the Parties have not agreed upon any definitive timeline to execute these agreements. Further, there are no pipeline products agreed under these arrangements.

8. It is submitted that the Proposed Investment, the Commercial Deals, and the Future Commercial Arrangements together constitute the “Proposed Transaction.”

9. However, considering that the Parties have neither agreed upon any definitive timeline to execute the Future Commercial Arrangements nor the proposed scope or contents of arrangements, the Commission deems it appropriate to exclude the same from the scope of review of the Proposed Transaction. Accordingly, for the purpose of this order, only the Proposed Investment and the Commercial Deals (i.e., Co-Marketing Agreement and Cloud Agreement) are referred to as the “Proposed Combination”.

Identification and Assessment of Overlaps

10. It is submitted in the notice that under the Proposed Investment, Google will acquire only a non-controlling minority stake in BAL of 1.28%. The Proposed Investment will not result in a combination of Google and BAL businesses or bring them under common ownership. The Parties will continue to operate and compete independently in their respective business activities. In addition, the Acquirer has also entered into certain commercial deals which are interconnected to the Proposed Investment and are part of the Proposed Transaction, under which it will receive certain information rights.

A. Assessment of Google’s Proposed Investment in BAL

11. It is mentioned that the Parties to the Proposed Investment (i.e., Acquirer and BAL) do not supply similar or identical or substitutable products or services. The Parties have, however, provided information relating to the competitive positioning in sectors where both Google and BAL (including their affiliates) are active in India as well as vertically related sectors in which they are active.

Combination Registration No. C-2022/03/913

12. In relation to horizontal overlaps, the Parties provided their information (including competition assessment) for the following sectors where both Google and BAL (including their affiliates) are active: a. The supply of apps and mobile/web-services by type:  Video streaming services  Communication services  Music streaming services  UPI payment services b. Advertising services c. Internet of Things (IoT) services for enterprises d. Cloud services e. Connected devices f. E-commerce marketplace g. The segment for marketing of mobile phones in India h. The market for provision of cloud services/solutions in India

13. In relation to vertical relationships, it is submitted that the Acquirer and BAL are not vertically related or engaged in any complementary activities; however, certain affiliates of Acquirer and an affiliate of BAL have entered into Commercial Deals as part of the Proposed Transaction. Further, the Parties provided information (including competition assessment) in relation to the following vertical relationships between Google and BAL (including their affiliates):

a) Services provided by BAL to Google (including their affiliates): [………………………………………..………….. ……………………… …………………………………………………………….. ……… ……………… …………………………………………………………………………….….. .… …………. ……………………………………]

b) Services provided by Google to BAL (including their affiliates): […………………………………………………………… ……………….….. .………… …………. ……………]

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…………………………………………………………………………….….. .… …………. ……………………………………]………………………………… ………………………………………….….. .… …………. ……………………………………]…………………………………………… ……… ………………..….… .… …………. ……] …………………………………………………………………………….….. .… …………. …………………………… …………………………..……………….….. .… ……………………………………] …………………………………………………………………………….….. .… …………. ……………………………………] vii. BAL and its affiliates currently distribute certain of its apps on Google‟s Play Store. These include Airtel Thanks, Airtel Thanks Lite, Wynk Music, Xstream, Airtel Xstream Fiber, Airtel XSafe, and Airtel Xstream Live. […………………………………………………………………………….….. .… …………. …………………………………… ……………………………………………] …………………………………………………………………………….….. .… …………. ……………………………………]

14. In view of the submissions in relation to identification of overlaps, it is noted that the identified segments could be further sub-segmented; however, the Commission decided to leave the exact delineation of the relevant market open, as it was observed that the Proposed Investment, for the reasons detailed in the ensuing paragraphs is not likely to cause an appreciable adverse effect on competition in any of the possible alternative relevant markets that could be delineated.

15. Further, based on the submissions of the Parties, it is noted that none of the horizontal overlaps arising out of the Proposed Investment as mentioned in para 12 above, are likely to raise competition concerns in India, as either the incremental share is insignificant or there is the presence of other players in the markets. Further, with respect to vertical relationships, it is noted that, given the overall market shares of Google and BAL in their relevant sectors, existing relationships between Google and BAL (including their affiliates), and/or presence

Combination Registration No. C-2022/03/913 of other players, there may not be any foreclosure concerns arising from the Proposed Investment.

B. Assessment of Google’s Proposed Investment in BAL and its existing stake in JPL

16. Additionally, it is also submitted in the notice that the Acquirer has a minority, non-controlling stake in Jio Platforms Ltd. (JPL) which is, inter alia, active in the markets for provision of wireless telecommunication services, supply of mobile phones, and provision of cloud services in India.

17. Considering that the Acquirer already has a certain stake in JPL and that by way of the Proposed Investment, it is also acquiring stake in BAL, which is also active in similar businesses, the issue of possibility of flow of competitively sensitive information between BAL and a competing firm was considered and, therefore, the Acquirer was required to provide certain information/clarification(s) in relation to the same.

18. The submissions in this regard are as under:

(a) Under the Proposed Transaction, the Parties are not combining or bringing together customer or user data. The Co-Marketing Agreement does not envisage the sharing of any customer or user-specific data by either Party. […………………………………… ……………… ……………………….….. .… …………. ………………………………………………………………….……]

(b) In any event, the Parties are obliged to implement appropriate technical and organisational measures to protect all data and information collected, accessed, processed, or received by or from either Party. Further, irrespective of the Proposed Transaction, the Parties must comply with all applicable privacy and data protection laws governing customer and/or employee data. […………………… …………… … ……… ……… ……………………….….. .… …………. ……………………………………]

Combination Registration No. C-2022/03/913 (c) Under the Cloud Agreement, Google will only access or use ADL‟s data to provide the services under the Cloud Agreement and any GCP technical support services ordered by ADL. Google will not use ADL‟s data for any other Google products, services, or advertising. Google will implement and maintain technical and organisational measures to protect customer data against accidental or unlawful destruction, loss, alteration, unauthorised disclosure, or access, as described in its Data Processing and Security Terms. Google does not need access to any personal data (as defined under the Cloud Agreement) to provide cloud services to BAL and its affiliates.

C. Assessment of Co-Marketing Agreement and Cloud Agreement (i) Competition Assessment of Co-Marketing Agreement It is submitted that under the Co-Marketing Agreement, Google and BAL (including its affiliates) will run co-marketing campaigns to promote the device program. [……………… …… … …………………………………………………….….. .… …………. ……………………] Specifically, BAL and its affiliates will drive the affordability of mobile devices through various cost reduction programs for users, such as lock-based lending. For these programs, BAL would use locking features such as Samsung Knox and Google Device Lock Controller (DLC). Under the Co-Marketing Agreement, the Parties have agreed to use Google‟s DLC feature for certain devices. It is submitted that, except for the supply of DLC, there is no other vertical relationship arising out of the Co-Marketing Agreement.

19. In relation to this potential vertical relationship between Google and BAL (including its affiliates), in the segment for Supply of device lock feature at the upstream level; and the segment for Use of DLC by ADL/ lenders at the downstream level respectively, the Parties have submitted that the segment for Supply of mobile device lock features is marked by presence of several competing firms such as Knox (Samsung), O Lock (Oppo), R Lock (RealMe), which provide device lock features themselves. Further, device lock features are also provided by other non-OEM firms, such as PayJoy and Harman, among others. Moreover, Google does not have any revenues from the device lock tool. Based on the submissions, it is noted that the potential vertical involving DLC is not likely to raise any foreclosure concerns.

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20. In addition to above, the Commission observed that certain clauses in the Co-Marketing Agreement are likely to raise certain competition concerns; therefore, the Acquirer was required to provide clarification/ information(s) in relation to the same.

(ii) Competition Assessment of Cloud Agreement 21. It is submitted that Google is active in the provision of cloud services via Google Cloud. Google Cloud includes public (Google Cloud Platform), private (Virtual Private Cloud), and edge and cloud (Edge TPU) computing. BAL is active in the provision of cloud services through Private Cloud. BAL provides private cloud services as part of an integrated portfolio of cloud, managed services, storage as a service, backup as a service, managed hosting, and disaster recovery.

22. Under the Cloud Agreement, Google will provide certain cloud services to BAL and its affiliate which will enable BAL to use Google‟s cloud services for its business on a non-exclusive basis.

23. Based on the submission, it is noted that neither Google nor BAL (including its affiliates) have a significant market share in the market for the supply of cloud services in India. Further, there are other players in this market, such as Amazon Web Services, IBM, Microsoft Azure, and Rackspace. It is also mentioned that proposed Cloud Agreement will result in a supplier/customer relationship between Google and BAL (and its affiliates). Therefore, it appears that the Cloud Agreement is not likely to raise any competition concerns.

Modifications Offered by the Acquirer 24. With respect to the possible competition concerns raised during the review of the Proposed Transaction by the Commission, inter alia, in relation to: (i) the possibility of flow of competitively sensitive information between BAL and a competing firm; and (ii) certain clauses of the Co-Marketing Agreement, the Acquirer made a submission dated 28.06.2022 in terms of regulation 19(2) of the Combination Regulations, through which it offered certain modifications, including: (i) Google will maintain an appropriate firewall to prevent the flow of competitively sensitive information between BAL and a competing firm that Combination Registration No. C-2022/03/913

Google may have access to on account of its investment; and (ii) undertaking to amend certain clause(s) of the Co-Marketing Agreement, as set out in Annexure A of this Order. Further, Google in its submission also confirmed that, under the Co-Marketing Agreement, Google and BAL will not share any customer or user-specific data.

Observations of the Commission and Decision 25. The Commission notes that the modifications offered by the Acquirer are adequate to address the competition concerns that would otherwise result from the Proposed Combination.

26. Considering the material on record, including the details provided in the Notice and the assessment of the Proposed Combination based on the factors stated in Section 20(4) of the Act, the Commission is of the opinion that the Proposed Combination is not likely to have any appreciable adverse effect on competition in India. Therefore, the Commission approves the Proposed Combination under Section 31(1) of the Act subject to carrying out of modifications offered by the Acquirer under Regulation 19(2) of Combination Regulations, attached to this order as Annexure A.

27. The order may be revoked if, at any time, the information provided by the Acquirer is found to be incorrect.

28. The information provided by the Acquirer shall be treated as confidential in terms of and subject to the provisions of Section 57 of the Act.

29. The Secretary is directed to communicate to the Acquirer accordingly.

Non-Confidential

Annex A Case C-2022/03/913 Modification Proposal Google proposes the following modifications to the Hon’ble Competition Commission of India (“Commission”) under Regulation 19(2) of the Competition Commission of India (Procedure in regard to the transaction of business relating to combinations) Regulations, 2011. 1. Modification 1: Firewall a. Google undertakes to have in place and maintain an appropriate firewall to prevent the flow of any competitively sensitive information between Bharti Airtel Limited and Jio Platforms Limited. As submitted in the Notice dated 9 March 2022, the Co-Marketing Agreement does not envisage the sharing of any customer or user-specific data by either Party. [………………………………………………………] [………………………………………………………………………………………………………… …………………………….]

[………………………………………………………………………………………………………… ……………………………………………………………………………………………………… ……………………………………………………………………. …………………………… ……………...] 3. Request for Confidentiality a. The contents of this modification concern competitively sensitive and confidential details on Google’s commercial terms and business partners that, if disclosed, will harm Google’s legitimate business interests. It is therefore critical that this modification in its entirety be kept confidential under Section 57 of the Competition Act, 2002 read with Regulation 35 of the Competition Commission of India (General) Regulations, 2009. All terms, unless specifically defined in this document, have the same meaning as ascribed to them in the Notice dated 9 March 2022.