NCLAT upholds CCI ruling against Google, cuts penalty to Rs 216 crore

The penalty imposed on Google was cut down from Rs 936.44 crore to Rs 216 crore

(This report has been updated)  The National Company Law Appellate Tribunal (NCLAT) on Friday partially upheld the Competition Commission of India’s (CCI’s) ruling on Google for alleged misuse of its dominant position related to Play Store policies and said the search engine giant had abused its dominant position in the Android mobile ecosystem, more particularly through its Play Store billing practice.

 

The tribunal, however, reduced the penalty the CCI levied on Google to ₹216 crore from ₹936.44 crore.

 

In its order on Friday, the tribunal said Google would allow and not restrict app developers from using any third-party billing services; would not impose any anti-steering provisions on app developers or restrict them from communicating with their users to promote their apps; and would not discriminate against other apps facilitating payment through Unified Payments Interface (UPI) in India vis-à-vis its own UPI app, in any manner.

 

The NCLAT, however, overruled several of the more stringent behavioural remedies imposed by the CCI such as no Third Party App Stores within Play Store; no mandatory uninstallation of pre-installed apps; and restriction on downloading apps outside of official apps.

 

“This decision sends a strong message that dominant digital platforms cannot unilaterally dictate commercial terms that hurt competition and innovation,” said Alay Razvi, managing partner of law firm Accord Juris.

 

Google’s parent company, Alphabet Inc, had approached the NCLAT, seeking a stay on the CCI’s October 25, 2022, order, which imposed a fine of ₹936.44 crore on it and asked Google to cease and desist from abusive practices in Play Store.

 

The case pertains to a Google Play Store policy that requires all app developers to only use Google Play’s billing system (GPBS) to charge customers. GPBS was not only used for receiving payments from apps but also for in-app purchases.

 

After Google started charging a 30 per cent commission in 2020 for Play Store transactions, some app developers filed a complaint with the CCI, prompting the action.

 

The tribunal on January 11, 2023, did not grant relief to Google and posted the matter for April. Google had then approached the Supreme Court against the NCLAT order but withdrew its case.

 

For Google, while the financial liability has been substantially mitigated, the adverse finding on the merits necessitates a recalibration of its Play Store policies to ensure compliance with Indian competition law, said Tushar Kumar, advocate practising at the Supreme Court.

 

“The ruling strengthens the position of app developers, who may now be able to leverage alternative billing mechanisms, potentially reducing their operational costs and fostering a more competitive app marketplace. Consumers may also benefit from increased pricing flexibility and a broader range of payment options,” he added.

 

Razvi said: “Google retains its core Play Store structure, avoiding major disruptions like hosting third-party app stores or allowing app uninstalls. However, it must modify its billing practices and pay the penalty of ₹216 crore. While the ruling softens compliance burdens, it confirms regulatory oversight and sets a precedent against misuse of dominance in India.”  "We welcome the NCLAT's decision to set aside certain directions in the CCI's order and substantially lower the penalty. Google is committed to supporting the growth of Indian developers and contributing to a thriving app ecosystem for both developers and users in India. We will continue to comply with all applicable laws and regulations as we review the NCLAT’s judgment and evaluate our legal options," Google said.      

Decoding the ruling

 

What NCLAT upheld Google shall not:

 

> Restrict app developers from using any third-party billing services

> Impose any anti-steering provisions on app developers

> lRestrict app developers from communicating with their users to promote apps

> Discriminate against other apps facilitating payment via UPI vis-à-vis its own UPI app

 

What it overruled

 

> No third-party app stores within the Play Store

> No mandatory uninstallation of pre-installed apps

> Restriction on downloading apps outside of official apps