1. Introduction

Device manufacturer pre-installation agreements are contracts under which a device manufacturer—such as a smartphone, computer, smart-TV, tablet, or other hardware OEM—agrees to install specified software, applications, search services, browsers, digital assistants, payment applications, or other services on a device before the device reaches the consumer.

Pre-installation itself is not inherently anti-competitive. It can reduce consumer setup costs, improve interoperability, provide useful functionality, and lower distribution costs for software suppliers. Competition concerns arise where a dominant supplier uses contractual control over OEM access to an essential or commercially important product to secure preferential placement, exclusivity, default status, bundled installation, or restrictions against competing products.

The principal competition-law issues are therefore:

1. Exclusive pre-installation
2. Mandatory bundling of applications
3. Default-setting requirements
4. Prominent placement requirements
5. Restrictions on competing applications
6. Revenue-sharing arrangements linked to exclusivity
7. Anti-fragmentation obligations
8. Restrictions covering the OEM's entire device portfolio
9. Foreclosure of rival software suppliers
10. Status-quo or choice-architecture effects
11. Leveraging from an operating-system/app-store market into adjacent markets
12. Reduction of innovation and alternative operating-system development

2. Why Pre-Installation Agreements Matter in Competition Law

Pre-installation provides a supplier with an advantage that ordinary post-sale downloading may not replicate.

A consumer receiving a new device may already encounter:

• a particular search engine;
• a particular browser;
• a particular app store;
• a particular digital assistant;
• a particular payment service;
• a particular mapping service;
• a particular media application.

The competitive significance increases where the pre-installed product is:

• the default;
• prominently displayed;
• difficult to uninstall;
• technically integrated into the operating system;
• automatically invoked for particular functions; or
• supported by contractual restrictions preventing OEMs from installing competing services.

The EU General Court in the Google Android litigation specifically considered the importance of pre-installation and the possibility of a status-quo bias, whereby users tend to use services already supplied with the device.

Thus, a competition-law assessment should distinguish between:

ordinary pre-installation and strategic contractual control over pre-installation.

3. Relevant Competition-Law Theories

A. Abuse of Dominance

Where the manufacturer or software supplier possesses a dominant position, pre-installation agreements may be examined as potentially abusive conduct.

The relevant theories can include:

• tying;
• bundling;
• exclusive dealing;
• foreclosure;
• discriminatory or unfair contractual conditions;
• leveraging;
• refusal to provide access on reasonable terms;
• loyalty-inducing arrangements.

Under Indian law, for example, Sections 4(2)(a), 4(2)(b), 4(2)(c), 4(2)(d), and 4(2)(e) of the Competition Act, 2002 can become relevant depending on the precise conduct.

B. Tying and Bundling

A particularly important concern occurs when:

OEM wants Product A → supplier says OEM must also pre-install Products B, C, D and E.

For example, if access to an app store is conditional upon installation of an entire proprietary application suite, the arrangement may potentially constitute tying or bundling.

The key questions are:

1. Are the products functionally or commercially distinct?
2. Does the supplier possess market power in the tying product?
3. Is the OEM effectively required to accept the additional products?
4. Is there substantial foreclosure of competitors?
5. Are there objective technological justifications?
6. Can OEMs install competing products?
7. Can consumers uninstall or replace the products?
8. Is there a realistic alternative distribution channel?

4. Exclusive Pre-Installation

Exclusive pre-installation is more problematic where an OEM receives:

• rebates;
• revenue sharing;
• marketing payments;
• technical benefits;
• preferential licensing;
• certification advantages; or
• other consideration

in exchange for not pre-installing competing products.

The competitive effect can be much greater than ordinary non-exclusive installation because rivals may lose access to an important distribution channel.

5. Default Settings

A pre-installed application becomes significantly more powerful when it is also the default.

For example:

Device → browser → default search engine

or

Device → voice assistant → default assistant

or

Device → app store → default distribution channel

Changing a default may require additional user action. Therefore, competition authorities may consider whether the contractual arrangement creates a persistent advantage for the incumbent.

The Google Android litigation illustrates the significance of this issue: the EU General Court examined the relationship between pre-installation, default positioning, user behaviour and competitive foreclosure.

6. Prominent Placement

A pre-installed application may receive:

• home-screen placement;
• first-page placement;
• default folder placement;
• prominent icon positioning;
• dedicated hardware-button access;
• default-widget positioning.

Even where rival applications technically remain capable of being installed, prominent placement can affect their ability to obtain equivalent visibility.

The CCI's Google Android decision considered the requirement that particular Google applications receive predetermined prominent placement on devices.

7. Case Law

1. United States v. Microsoft Corp., 253 F.3d 34 (D.C. Cir. 2001)

This is one of the most important precedents concerning OEM distribution restrictions.

Microsoft possessed a dominant position in PC operating systems and distributed Windows primarily through pre-installation by OEMs. The DOJ described OEM pre-installation as the principal distribution channel for operating systems.

Microsoft imposed restrictions affecting OEMs' ability to modify the Windows desktop and remove or alter access to Internet Explorer.

The D.C. Circuit found that Microsoft's restrictions prevented OEMs from removing visible means of access to Internet Explorer and thereby impeded distribution of rival browsers.

Principle

A dominant technology supplier cannot necessarily use OEM contractual arrangements to control an important distribution channel for the purpose of protecting its position against competing products.

Relevance

This case establishes the importance of:

• OEM distribution;
• desktop placement;
• default/visibility;
• contractual restrictions;
• foreclosure of rival software.

8. Google Android — European Commission / General Court

2. Google Android, Case T-604/18, Google and Alphabet v Commission

The Google Android litigation is directly relevant to pre-installation agreements.

Google's Mobile Application Distribution Agreement (MADA) governed pre-installation of Google Mobile Services on Android devices.

The EU General Court examined the Commission's findings concerning pre-installation conditions and their ability to confer a competitive advantage on Google.

The Court considered evidence concerning the importance of pre-installation and the possibility that users develop a status-quo bias toward services already available on their devices.

Google argued that OEMs remained free to install rival applications and that the required Google icons did not prevent competing services from being installed.

Principle

The fact that rivals are technically capable of being installed does not automatically eliminate competition concerns. The practical competitive significance of:

• pre-installation;
• prominence;
• default status;
• user behaviour; and
• alternative distribution channels

must be considered.

Relevance

This is directly applicable to:

• smartphone agreements;
• smart-TV agreements;
• app-store agreements;
• browser agreements;
• search-engine agreements;
• digital-assistant agreements.

9. Google Android — Competition Commission of India

3. Umar Javeed & Others v. Google LLC & Another, CCI Case No. 39 of 2018

This is particularly important for Indian competition-law analysis.

The CCI examined Google's arrangements with Android OEMs, including the MADA, Anti-Fragmentation Agreement/Android Compatibility Commitment and Revenue Sharing Agreements.

The CCI found that mandatory pre-installation of the entire Google Mobile Services suite and prominent placement constituted unfair conditions under Section 4(2)(a)(i) and supplementary obligations under Section 4(2)(d).

The Commission also considered the effect of the arrangements on rival search services, browsers and other applications.

It specifically identified the importance of pre-installation as a distribution mechanism and considered its relationship with status-quo bias.

Principle

A dominant platform may face competition-law liability where access to a commercially important service is connected to mandatory installation of an entire bundle of its other applications.

Particularly relevant factors

• dominant app-store position;
• mandatory application bundle;
• prominent placement;
• lack of equivalent rival distribution;
• default search;
• restrictions affecting Android forks;
• revenue-sharing arrangements.

10. Google LLC v. Competition Commission of India — NCLAT

4. Google LLC & Another v. Competition Commission of India & Others, Competition Appeal (AT) No. 1 of 2023

The appellate proceedings provide an important additional perspective.

The NCLAT considered the CCI's finding that the pre-installation of the entire GMS suite amounted to an unfair condition imposed on OEMs and upheld the relevant finding concerning Sections 4(2)(a)(i) and 4(2)(d).

The proceedings also illustrate an important defence available to technology companies: Google argued that MADA was voluntary and non-exclusive and that OEMs remained able to install competing applications.

Principle

The legal assessment cannot stop merely at asking whether a contract is formally voluntary. Authorities can examine the commercial necessity and practical bargaining position of the parties.

Relevance

This is especially important where:

"The OEM is technically free to refuse the agreement"

but refusing the agreement may deprive it of commercially important software or services.

11. Google Android TV — CCI Case No. 19 of 2020

5. Kshitiz Arya & Another v. Google LLC & Others

The CCI's Android TV proceedings concern another form of device manufacturer pre-installation arrangement.

The Commission examined agreements involving Google's proprietary applications and Play Store on smart-TV devices.

The investigation considered whether making access to proprietary applications conditional upon contractual commitments could restrict OEMs' ability to develop or distribute devices using competing Android versions.

The CCI also examined allegations concerning mandatory pre-installation of Google's TV services.

Principle

The competition analysis of pre-installation can extend beyond smartphones to:

• smart televisions;
• connected devices;
• IoT hardware;
• automotive infotainment;
• wearable devices.

The relevant question is whether control over one layer of the technology stack is being used to constrain competition at another layer.

12. Intel v Commission

6. Intel Corp. v Commission, Case C-413/14 P

Although Intel is principally a conditional rebate case rather than a pure pre-installation case, it is highly relevant to OEM arrangements.

Intel supplied microprocessors to major OEMs including Dell, HP, NEC and Lenovo and used conditional rebates linked to purchasing requirements.

The EU courts considered the competitive significance of arrangements directed at OEM purchasing decisions and the possibility of excluding competitors.

Principle

The economic assessment of an OEM arrangement should consider its actual or potential foreclosure effects, rather than merely its contractual label.

Application to pre-installation

A manufacturer offering:

"Install our software exclusively and receive a rebate"

may therefore raise issues similar to other conditional arrangements directed at OEM commercial decisions.

The precise legal test depends upon the conduct and applicable jurisdiction.

13. United States v Microsoft — OEM Licensing Proceedings

7. United States v. Microsoft Corp., OEM licensing restrictions

The Microsoft proceedings also involved specific restrictions governing what OEMs could display or remove from computers.

The findings recorded that Microsoft's restrictions increased the cost to OEMs of pre-installing and promoting Netscape Navigator and in some instances deterred OEMs from pre-installing Navigator.

Principle

A contractual restriction need not expressly say:

"Do not install the rival."

It can produce similar competitive effects by making rival installation commercially or technically more difficult.

This is particularly important for modern device ecosystems where contractual requirements can operate through:

• certification;
• API access;
• software development kits;
• device approval;
• technical compatibility;
• licensing;
• revenue sharing.

14. Google Search Revenue-Sharing Agreements

8. Google Android Revenue Sharing Arrangements

The CCI also examined Revenue Sharing Agreements entered into between Google and various OEMs.

According to the CCI's order, certain arrangements provided for exclusive pre-installation of Google Search or Google Assistant and default-search requirements, while restricting the installation of competing search services on covered devices.

Principle

Pre-installation becomes substantially more competition-sensitive when combined with:

pre-installation + default status + exclusivity + financial incentives.

The cumulative structure may create a stronger foreclosure mechanism than any individual contractual provision.

15. Comparative Table

16. Key Legal Tests

A competition authority examining a device manufacturer pre-installation agreement would normally investigate several interconnected questions.

A. Market Power

Does the supplier have substantial power in:

• operating systems;
• app stores;
• search;
• browsers;
• digital assistants;
• device ecosystems;
• cloud services; or
• another relevant market?

B. Importance of OEM Distribution

How important is OEM pre-installation to reaching consumers?

If almost every device reaches consumers with software already installed, pre-installation can become an extremely important distribution channel.

C. Contractual Compulsion

Is the OEM:

• legally required to install the product?
• required to install a bundle?
• financially incentivised?
• technically constrained?
• prevented from installing rivals?
• required to use specified defaults?

D. Duration

Long-term agreements can have greater foreclosure potential than short-term arrangements, particularly where rivals require substantial investment to establish distribution.

E. Coverage

An agreement covering:

one particular device

is different from an agreement covering:

the OEM's entire product portfolio.

The latter can significantly increase foreclosure.

The CCI's Android TV proceedings specifically considered concerns arising from contractual obligations extending beyond the particular Android TV device to an OEM's broader portfolio.

17. Pre-Installation and Choice Architecture

Modern competition law increasingly has to consider choice architecture.

Suppose a device contains:

1. Google Search — pre-installed
2. Google Chrome — pre-installed
3. Google Assistant — pre-installed
4. Google Play — pre-installed
5. Rival applications — available only through downloading

The formal ability to choose may exist, but the practical competitive environment may still be asymmetric.

This is why the Google litigation examined whether pre-installation could generate a durable usage advantage through user behaviour.

18. Pre-Installation Versus Post-Installation

This does not mean every pre-installed product is anti-competitive.

The central issue is the combination of market power and contractual mechanisms.

19. Legitimate Business Justifications

A manufacturer or software supplier may have legitimate reasons for pre-installation agreements.

Examples include:

1. Technical integration

A service may need to be integrated into the operating system.

2. Security

Pre-installation may facilitate security updates or device protection.

3. Consumer convenience

Consumers may expect basic functionality immediately after purchasing the device.

4. Interoperability

Pre-installed applications may be necessary for interoperability with hardware.

5. Commercial efficiency

OEMs may receive software at no licensing cost.

6. Quality assurance

The supplier may wish to ensure that its application operates consistently on certified hardware.

These justifications should be tested against the least restrictive means available.

20. Particularly Risky Contractual Clauses

Competition authorities may scrutinize clauses such as:

Exclusive-installation clause

OEM shall not pre-install competing applications.

Default clause

Supplier's application shall remain the default search/browser/payment service.

Portfolio-wide clause

OEM shall comply with the restriction on all devices it manufactures.

Bundle clause

Access to one essential application requires installation of the entire application suite.

Placement clause

Supplier's applications must occupy specified home-screen positions.

Anti-uninstall clause

OEM shall prevent consumers from removing the application.

Revenue-sharing clause

OEM receives revenue only if competing applications are excluded.

Anti-fork clause

OEM cannot manufacture devices based on alternative versions of the operating system.

These clauses become substantially more competition-sensitive when imposed by a dominant ecosystem provider.

21. Cumulative Effects

One of the most important lessons from the Google Android proceedings is that individual contractual arrangements should not always be analysed in isolation.

Consider:

App-store dominance

↓

MADA

↓

Mandatory application bundle

↓

Prominent placement

↓

Default search

↓

Revenue-sharing agreement

↓

Exclusivity

↓

Anti-fragmentation obligations

↓

Reduced distribution opportunities for rivals

The combined effect may be considerably greater than the effect of any single agreement.

The CCI expressly examined MADA, AFA/ACC and RSAs together when analysing the competitive consequences of Google's Android arrangements.

22. Effects on Innovation

Pre-installation agreements can affect innovation in several ways.

First

Rivals may struggle to obtain sufficient distribution.

Second

Reduced distribution can reduce:

• user adoption;
• developer investment;
• advertising revenue;
• data accumulation;
• ecosystem participation.

Third

Reduced competitive pressure may diminish incentives to innovate.

Fourth

OEMs may have fewer incentives to develop alternative operating systems or alternative software ecosystems.

This was particularly important in the CCI's analysis of Android forks and the effect of contractual restrictions on OEM incentives to develop alternative Android-based systems.

23. Device Manufacturer Perspective

OEMs should therefore examine pre-installation agreements for:

• exclusivity;
• minimum installation commitments;
• portfolio-wide restrictions;
• default requirements;
• placement requirements;
• uninstall restrictions;
• competing-product restrictions;
• revenue-sharing conditions;
• API access;
• certification;
• termination rights;
• switching costs.

A commercially attractive free software licence may still carry significant competitive restrictions.

24. Competition Assessment Framework

A useful analytical framework is:

Step 1 — Identify the relevant market

↓

Step 2 — Determine market power

↓

Step 3 — Identify the OEM relationship

↓

Step 4 — Identify the pre-installation obligation

↓

Step 5 — Determine whether installation is exclusive

↓

Step 6 — Examine defaults and placement

↓

Step 7 — Examine financial incentives

↓

Step 8 — Examine competing-app restrictions

↓

Step 9 — Measure foreclosure

↓

Step 10 — Examine effects on innovation and consumer choice

↓

Step 11 — Consider efficiencies and objective justifications

↓

Step 12 — Determine whether less restrictive alternatives exist

25. Distinction Between Lawful and Potentially Problematic Arrangements

Generally less concerning

OEM voluntarily installs an application and remains free to install competitors, select defaults, change placement and permit consumer removal.

More concerning

Dominant supplier gives OEM access to an important service only if the OEM installs a complete bundle.

Even more competition-sensitive

Dominant supplier requires installation + prominence + default status + exclusivity + financial incentives.

Highest-risk structure

Dominant supplier controls an essential distribution channel and uses pre-installation contracts to prevent OEMs from supporting competing ecosystems or operating systems.

The legal conclusion will nevertheless depend upon the relevant market, market power, contractual terms, duration, coverage and demonstrated competitive effects.

26. Overall Legal Significance

Device manufacturer pre-installation agreements have evolved from simple distribution contracts into potentially important ecosystem-control mechanisms.

The most important competition-law distinction is:

Pre-installation is not inherently anti-competitive; the concern arises when market power is used to make pre-installation a mechanism for foreclosure, tying, exclusivity, default control or ecosystem expansion.

The principal lessons from Microsoft, Google Android, Google Android TV, and Intel are that competition authorities can examine not merely whether rivals remain technically available, but also whether contractual arrangements materially affect their distribution opportunities, visibility, defaults, ability to scale, innovation incentives and access to OEM channels.