Google is not a charity to offer everything for free, Competition Commission tells NCLAT

The Competition Commission of India (CCI), on March 2, argued at the National Company Law Appellate Tribunal (NCLAT) that Google is not a charity organisation to offer everything for free, it is a business organisation that earns money from everything it offers to the market.

CCI made this argument to counter the tech giant’s argument that the company offers Android open source for free to Original Equipment Manufacturers (OEMs). The anti-trust watchdog began its arguments in Google’s appeal against the order holding that the company abused its dominant position in the ecosystem to impose unfair conditions on OEMs.

ALSO READ: Google Vs CCI: What has transpired so far & how it will affect Indian app makers

Additional Solicitor General (ASG) Venkatraman, appearing for CCI began the arguments by comparing Google’s blog posts after the order of the European Commission’s (EU) similar order with the company’s blog post after CCI’s order to argue that there is a stark difference in the tech giant’s attitude when a similar order was passed by anti-trust regulators in different jurisdictions.

Venkatraman stated that 29 billion mobile applications are downloaded in India, these downloads generate a huge amount of advertisement revenue, and Google monetarily benefits from majority of the revenue. The ASG argued that while a company can earn as much revenue as it may, its anti-competitive practices to earn the revenue cannot be legitimised through judicial process.

The ASG claimed that Google’s ad revenue is close to Rs 15 lakh crore, more than the Gross Domestic Product (GDP) of many small countries. He said, “They are not charity; they are a business institution. Our traffic is completely monetised.”

Venkatraman said that CCI is not angry, jealous or afraid of Google’s revenues and the size of the business, it is only concerned whether the company’s revenue is earned through anti-competitive means.

Google arm-twisted OEMs after gaining prominence

The ASG alleged that Google started arm-twisting OEMs immediately after the Android ecosystem started gaining prominence. CCI argued that Google made it compulsory for OEMs to sign various agreements that did not permit them to make modifications to the Android OS. “Google has created a web of agreements to meet the sole objective of increasing the advertising revenue,” he said.

Venkatraman argued that contracts such as Anti-Fragmentation Agreement (AFA), Mobile Application Distribution Agreement (MADA) and Revenue Sharing Agreement (RSA) created a web around the OEMs from which they have not been able to come out.

CCI argued that Google also influenced the mind of customers by introducing features such as ‘sideloading’, which warns the users when they download applications directly from the app creator’s website. He said, “Sideloaded gives a warning every 10 seconds. How will the consumer react? It will create a doubt in their minds, and in the process stays on course only with Google or bundled apps.”

Five ‘punch points’

The ASG said that he will conclude his arguments for the day by stating five punch points on Google’s policies. According to him, the policies promote

1) digital feudalism

2) digital slavery

3) technological captivity

4) choke point capitalism

5) total consumer exploitation

Background of the case

In 2018, Android users alleged before 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 Google Mobile Services (GMS) suite under MADA was an unfair condition. CCI subsequently ordered an investigation by the director general (DG) of its investigative arm on this issue.

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

On October 20, 2022, 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.

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.

On February 15, Google argued that the antitrust regulator's order suffers from "confirmation bias" and is based on a similar order issued by the EU in 2018.

On February 16, the tech giant argued that the CCI order is based on a flawed investigation.

The tribunal began its hearing in the case on February 15, and will continue to hear arguments by Google on March 3. Venkataraman is expected to recommence his arguments for CCI after Holi vacations.