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Google gets relief on four key CCI directives, but Rs 1,338-cr fine stays

NCLAT upholds competition watchdog's observation that Google misused dominant position in Android ecosystem

Google, alphabet

Photo: Bloomberg

Bhavini MishraSourabh Lele New Delhi
The National Company Law Appellate Tribunal (NCLAT) on Wednesday upheld the Competition Commission of India (CCI) order imposing a penalty of Rs 1,337.76 crore on Alphabet-owned Google for misusing its dominant position in the Android mobile device ecosystem, even as it set aside four directions of the competition watchdog that the tech giant had to comply with.

The NCLAT set aside the directions relating to the non-monetary directives that would have forced Google to allow uninstalling of its pre-installed apps on Android devices.

In another relief for Google, the directive that asked the tech giant to allow individual app store developers to distribute their app store via Google Play Store was also quashed. This CCI order was a major concern for Google as it technically allowed other app stores on Play Store.

The tech giant is now evaluating its legal options after the NCLAT partially upheld CCIs ruling. “We are grateful for the opportunity given by the NCLAT to make our case. We are reviewing the order and evaluating our legal options,” said a Google spokesperson.

It has been given 30 days to comply with all the other directions of the CCI and pay the penalty. A person in the know said the NCLAT has done a judicial balancing act by setting aside four CCI directions.

The person said that by ensuring that there is no pre-installation of the Android ecosystem on devices, a lot of market correction has already been done. The NCLAT also set aside the CCI's direction that said that Google shall not restrict uninstalling of its pre-installed apps by the users. 

“Google can continue giving warnings against sideloading of apps; it also seems fair that Google Play Store does not have to give a platform to other app stores,” the person said.  

Besides these two directives, the tribunal set aside the CCI’s direction to Google to allow app developers to distribute apps through sideloading, and not deny access to its Application Programming Interface (APIs) to the disadvantage of original equipment manufacturers, app developers, and its existing or potential competitors.

“This decision is likely to have a far-reaching impact on operating systems (OS) like Android, online video hosting platforms (OVHP) like YouTube, and app stores. Google will still be able to appeal this decision before the Supreme Court. The silver lining for Google is that it has been able to get the NCLAT to set aside some directions of the CCI that were particularly concerning for Google, considering its business model and operations,” said Anupam Shukla, partner at Pioneer Legal.

Google will still need to comply with the remaining six orders of the CCI.

Among those directions are that Google won’t force OEMs to pre-install a bouquet of its applications or restrain them from choosing from among Google’s proprietary applications to be pre-installed and deciding the placement of pre-installed apps on their smart devices. The company will also not be able to link the licensing of Play Store and Play services to OEMs with the requirement of pre-installing any other application of Google.

Another contentious part of the CCI’s directives was to allow devices that do not have Google’s proprietary applications pre-installed and that OEMs should be permitted to manufacture or develop Android forks-based smart devices for themselves. The CCI ordered Google to refrain from incentivising or otherwise obligating OEMs for not selling smart devices based on Android forks.

The CCI had also directed that Google should not offer any monetary or other incentives for ensuring exclusivity for its search services. It will also need to allow users to choose their default search engine for all search entry points. Additionally, Google should not impose anti-fragmentation obligations on OEMs.

The CCI, on the other hand, can also challenge the NCLAT’s move to set aside the four key directions to Google. The decision of the competition watchdog has been upheld by the appellate tribunal, in respect of the alleged abuse of dominance by Google to promote its payment applications and in-app payment systems in India.

The NCLAT has rejected Google’s plea relating to the violation of natural justice principles, among others, and directed the tech giant to cease and desist from participating in anti-competitive practices and deposit the penalty amount.

“The appellant (Google) is allowed to deposit the amount of penalty (after adjusting the 10 per cent amount of penalty as deposited under the January 4, 2023, order) within a period of 30 days from today. The appellant is allowed 30 days’ time to implement the measures as directed in paragraph 617 (to the extent upheld by this order),” the order read.

Ketan Mukhija, partner, Link Legal, said: “Importantly, the NCLAT has set aside a few among the antitrust directives to Google; however, the remainder of behavioural remedies as were ordered by the CCI would now be required to be complied with by Google until and subject to the final disposal of the matter. While these directives are likely to have a positive impact on the general consumers of India in terms of reduced costs and a greater array of choices, it remains to be seen if the ones now set aside would serve to fetter the discretion of the commission.”

The Alliance of Digital India Foundation (ADIF) -- an industry body for India’s digital start-ups -- said that the NLCAT order "cements the fact that the abusive dominance by Google due to its bundling of Android OS and Play Store with its own apps is real and regressive for the Indian start-up ecosystem".

It, according to PTI, said the mandatory pre-installation of Gmail, Chrome, Search, Maps, and YouTube creates entry barriers, and price asymmetry and restricts innovation in these segments."

It should be noted that last year, the European Commission penalised Google approximately ^2.4 billion for abusing its market dominance as a search engine, by giving an unlawful advantage to another product owned by Google.

A Bench of NCLAT Chairperson Justice Ashok Bhushan and Alok Srivastava, member (technical), had reserved its verdict on March 20 after hearing the arguments for over a month.
CCI directives set aside
  • Allow removal of pre-installed apps on Android devices
  • Allow distribution of third-party app stores through Google Play Store
  • Allow developers to distribute apps through side-loading
  • Do not deny access to play services APIs to the disadvantage of OEMs, app developers, and existing or potential competitors
The CCI found Google to have abused its dominant position in contravention of the provisions of the Competition Act, 2002, on October 20, 2022. It penalised the tech company and asked it to pay Rs 1,337.76 crore for practices related to Android devices. The market regulator also ordered it to cease and desist from various unfair business practices.

Google was earlier given three months to comply with the CCI’s directives and its deadline was January 19.

The tech giant then moved the NCLAT on December 22, 2022, and on January 4, the appellate tribunal asked it to pay 10 per cent of Rs 1,337.76 in three weeks and posted the matter for hearing on April 3. Seeking relief, Google then knocked on the doors of the apex court.

After the apex court refused to grant interim relief on January 19, the matter was sent back to the NCLAT for the final order by March 31. Google still has to comply with the other directions of the CCI.

Advocates Samar Bansal, Manu Chaturvedi, Aakriti Singh, and Vedant Kapur assisted Additional Solicitor General N Venkataraman for the CCI. Senior Advocates Maninder Singh and Arun Kathpalia and others appeared for Google.

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First Published: Mar 29 2023 | 9:39 PM IST

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