CCI’s Android abuse order based on flawed investigation, Google tells NCLAT

Google on February 16 alleged at the National Company Law Appellate Tribunal that the investigation conducted by the Competition Commission of India (CCI), which held that the company abused its dominant position in the Android ecosystem, is flawed.

The tech giant’s lawyer argued that the director general of the antitrust body had asked leading questions to original equipment manufacturers (OEMs), which demonstrated that the official had preconceived notions on the issue. Google also alleged that the DG had not conducted a proper consumer survey before submitting his findings to the CCI.

Google said that despite being asked leading questions, OEMs such as Oppo had clearly told the DG that the tech giant had not imposed any unfair conditions on them to let them use Android as the OS for their devices.

The CCI order against Google was issued in October 2022, when the regulator held the company responsible for abusing its dominant position in multiple markets in the Android mobile device ecosystem. It levied a penalty of Rs 1,337.76 crore.

Google in its arguments on February 15 had said that the regulator's order suffered from "confirmation bias" and was based on a similar order issued by the European Commission in 2018.

Arun Kathpalia, the senior advocate appearing for Google argued that Android has been beneficial to both users and manufacturers ever since it was made open-source. He submitted that Android was introduced in 2007, when there were no quality open-source operating systems.

Google argued that Android is an open-source, royalty-free operating system that permits OEMs to innovate without any restrictions. Kathpalia said, “In the face of these benefits, there must be something compelling to say Google went wrong. However, there are no such reasons.”  He submitted that there were three stakeholders in the Android ecosystem: the owner of the OS; OEMs; and app developers.

However, none of these stakeholders initiated the complaint against Google, and this in itself should have discouraged the CCI from proceeding further, Kathpalia argued.

Google reiterated that asking device manufacturers to preinstall the entire Google Mobile Services (GMS) suite under its Mobile Application Distribution Agreement (MADA) does not stop them from preinstalling competing apps. The company further said that MADA is a voluntary agreement and not compulsory.

Kathpalia argued that for a condition in a contract to be classified as unfair, the Competition Act, 2002, contemplates the following:

1) Condition should have been imposed on account of dominance in the market: Google argued that it has been imposing the allegedly ‘offending’ conditions from 2007, even before Android became a dominant player

2) Condition is likely to have an adverse effect on the competition:  Google stated that none of the competitors have alleged any adverse effect

3) Condition holds no reasonable value on the party on whom it is imposed: Google’s apps being preinstalled only adds value to the phones and not the other way round, it argued.

4) No objective justification for placement of the condition in the contract: According to Google, apps that it makes available are valuable ones, good for user experience, thereby boosting the sale of the equipment.

Kathpalia argued that since the conditions it imposes through MADA does not come under any of these categories, it cannot be said to be unfair.

In 2018, Android users alleged before the CCI that Google was abusing its dominant position in the mobile operating system-related market in contravention of the provisions of the Competition Act, 2022. It was alleged that Google asking device manufacturers to preinstall the entire GMS suite under MADA is an unfair condition. The CCI subsequently ordered an investigation by the DG of its investigative arm on this issue.

The CCI in 2019 expressed a prima facie opinion that mandatory preinstallation of the entire GMS suite under MADA amounted to the imposition of unfair conditions on device manufacturers.

On October 20, 2022, the CCI, based on the DG’s report and other documents filed by both sides, concluded that Google was abusing its dominant position in multiple markets in the Android mobile device ecosystem.

The CCI held that Google can neither force OEMs of smart devices to preinstall its apps nor restrict users from uninstalling such apps. Furthermore, it asked the US-based company not to offer any incentives to OEMs to comply with its conditions.

Google moved the NCLAT in January, but failed to get immediate relief. The company then approached the Supreme Court against the tribunal's decision. While the apex judicial body refused to intervene in the case, it asked the NCLAT to decide on the matter by March 31, 2023.

The tribunal began its hearing in the case on February 15, and will continue to hear arguments on February 16 and 17. The bench, earlier in the day, indicated that it will consider applications for intervention by companies who are affected by the alleged abusive policies of Google.