NCLAT upholds CCI's Rs. 1338 crore penalty on Google

Google

The National Company Law Appellate (NCLAT) on March 29 partially upheld  Competition Commission of India’s (CCI) Android dominance order against Google. The tribunal has upheld the penalty of Rs. 1338 crores imposed by CCI.

The anti-trust appellate tribunal has held that the CCI's order does not suffer from any confirmation bias. Furthermore, the NCLAT has held that Google asking the Original Equipment Manufacturers (OEMs) to pre-install the entire Google Suite of 11 applications amounts to imposition of unfair conditions.

The NCLAT has held that Google indeed reduces the incentive of the OEMs to develop their own version of Android (Android forks) by imposing conditions through its Anti Fragmentation Agreement (AFA) bars OEMs from developing and distributing Android forks.

Directions in Google's favour:

The NCLAT has set aside four key directions issued to Google by the CCI.

1. Google was fair in sending warnings (Sideloading) to users when they download applications directly from the website or from an unknown source.
2. Google need not share its proprietary Application Program Interface (API) with third parties.
3. Google was right in not permitting third party application stores on its play stores to avoid malware
4. Google can restrict uninstallation of Google suite apps on Android phones

A bench led by Chairperson Justice (retd) Ashok Bhushan and Dr Alok Srivastava reserved the case for judgment after hearing it for over a month.

The tribunal started hearing the case on February 15 after the Supreme Court directed it to decide the case by March 31. Over a period of one moth, the tribunal heard arguments from Senior Counsels Arun Kathpalia and Maninder Singh who appeared for Google. The CCI was represented by Additional Solicitor General N Venkataraman and standing counsel Samar Bhansal.

Application developers such as MapmyIndia, Indus OS and Epic Games also argued how Google’s policies adversely affected them and drove them to extinction.

In 2018, Android users moved the competition watchdog alleging that Google was abusing its dominant position in the mobile operating system-related market in contravention of the provisions of the Competition Act. It was alleged that the US tech giant's demand that device manufacturers must preinstall the entire GMS or Google Mobile Services suite under its Mobile Application Distribution Agreement or MADA was an unfair condition.

The CCI subsequently ordered an investigation by the director general (DG) of its investigative arm into this matter.

The CCI had 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, 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. It asked Google to cease and desist from its practices, and pay a penalty Rs 1,338 crore.

The fair practice regulator held that Google could neither force OEMs of smart devices to preinstall its apps, nor restrict users from uninstalling such apps. It also asked the US major not to offer any incentives to OEMs to comply with its conditions.

Google moved the NCLAT in January but failed to get an immediate relief. The company then approached the Supreme Court against the tribunal's decision. The apex court, in turn, refused to intervene in the case and asked NCLAT to look into it.