The tech-giant Google has been served with an order from the National Company Law Appellate Tribunal (NCLAT), upholding the penalty imposed by the Competition Commission of India (CCI), for its anti-competitive policies regarding the model and functioning of the Android and Google’s ecosystem.
Many issues were raised in the appeal by Google LLC and Google India Pvt. Ltd, against the order of the Competition Commission.
Earlier, the Supreme Court of India had upheld the order by the National Company Law Appellate Tribunal (NCLAT), in another major setback to Google LLC, in the Competition Commission of India (CCI) case about abusing the Android Platform and the dominant position in the market. The Competition Commission of India (CCI) had imposed a penalty of Rs. 936.44 crores on Google for abusing its dominant position with respect to its Play Store policies, apart from issuing a cease-and-desist order. The Commission also directed Google to modify its conduct within a defined timeline.
This business model and the functioning of Android Google’s eco-system on mobile devices had been captured by the CCI in the Impugned Order while Competition Appeal (AT) No.01 of 2023 calculating the “relevant turnover” and thus the CCI has decided to take the sum total of revenue of various segments/heads of Google business operating pertaining to India while calculating the ‘relevant turnover’.
The Bench also expressed the opinion that, while calculating the “relevant turnover”, the CCI has correctly considered the sum total of revenue of various segments/heads in India arising out of the entire business of Google India’s operations of Android OS based mobiles.
The directions issued in Paragraph 617 of the order of the Commission were assailed by the counsel appearing for the appellant, led by Maninder Singh & Arun Kathpalia, Senior Advocates.
The Paragraph 617 reads as follows: –
“617. Accordingly, in terms of the provisions of Section 27 of the Act, the Commission hereby directs Google to cease and desist from indulging in anti – competitive practices that have been found to be in contravention of the provisions of Section 4 of the Act, as detailed in this order. Some of the measures, in this regard, are indicated below:
617.1. OEMs shall not be restrained from (a) choosing from amongst Google s proprietary applications to be pre-installed and should not be forced to pre¬ install a bouquet of -15- Competition Appeal (AT) No.01 of 2023 applications, and (b) deciding the placement of pre-installed apps, on their smart devices.
617.2. Licensing of Play Store (including Google Play Services) to OEMs shall not be linked with the requirement of pre-installing Google search services, Chrome browser, YouTube, Google Maps, Gmail or any other application of Google.
617.3. Google shall not deny access to its Play Services APIs to disadvantage OEMs, app developers and its existing or potential competitors. This would ensure interoperability of apps between Android OS which complies with compatibility requirements of Google and Android Forks. By virtue of this remedy, the app developers would be able to port their apps easily onto Android forks.
617.4. Google shall not offer any monetary/ other incentives to, or enter into any arrangement with, OEMs for ensuring exclusivity for its search services.
617.5. Google shall not impose anti-fragmentation obligations on OEMs, as presently being done under AFA/ ACC. For devices that do not have Google’s proprietary applications pre-installed, OEMs should be permitted to manufacture/ develop Android forks based smart devices for themselves.
617.6. Google shall not incentivise or otherwise obligate OEMs for not selling smart devices based on Android forks. -16- Competition Appeal (AT) No.01 of 2023 617.7. Google shall not restrict uninstalling of its pre-installed apps by the users.
617.8. Google shall allow the users, during the initial device setup, to choose their default search engine for all search entry points. Users should have the flexibility to easily set as well as easily change the default settings in their devices, in minimum steps possible.
617.9. Google shall allow the developers of app stores to distribute their app stores through Play Store.
617.10. Google shall not restrict the ability of app developers, in any manner, to distribute their apps through side-loading.”
It was observed by the Company Law Appellate Tribunal Bench that, “Regarding the issue of imposition of “provisional penalty” consider the argument of the Learned Senior Counsel of the Appellant that there is no provision in the Competition Act for imposing a provisional penalty, with the possibility of revising it on receipt of further information data. We are of the view that the section 27(b) of the Competition Act, 2002 provides for imposition of penalty, which shall not be more than 10% of the average turnover for the last three preceding years upon enterprises, which are parties to such agreements or abuse.”
“Once the CCI has derived the “best estimate” of the relevant turnover for the last three preceding financial years, and imposed a penalty of 10% of the average of such turnover, we are of the opinion that further revision of this penalty on the basis of financial information or data that may come to light in future will not be in keeping with law. We thus, delete the word ‘provisional’ used in imposition of penalty in para 650 and elsewhere in the Impugned Order and hold that this penalty imposed is final and would not be subject to any revision upon Google furnishing any further financial details and supporting documents, as sought by CCI vide its order dated 19.9.2022”, the bench further observed.
“Now coming to the submission advanced by Shri Amit Sibal, learned Senior Advocate, Shri Abir Roy and Shri Rajshekhar Rao, Senior Advocate on behalf of different Intervenors, suffice it to say that they have supported the impugned order advancing certain submissions which have been elaborately advanced by learned ASG appearing for Competition Commission of India, hence submission of Intervenors need no separate considerations”, the tribunal bench remarked on the submissions of the government representatives.
Justice Ashok Bhushan, Chairperson and Dr. Alok Srivastava, Member (Technical) of the National Company Law Appellate Tribunal (NCLAT) thus held that, “we dispose of this Appeal in following manner:
(i) The impugned order of the Commission dated 20th October, 2022 is upheld, except as indicated at direction (ii) below;
(ii) Direction issued in paragraphs 617.3, 617.9, 617.10 and 617.7 are set aside. Rest of the directions under paragraph 617 and fine imposed by paragraph 639 are upheld.
(iii) The Appellant is allowed to deposit the amount of penalty (after adjusting the 10% amount of penalty as deposited under order dated 04.01.2023) within a period of 30 days from today.
(iv) The Appellant is allowed 30 days’ time to implement the measures as directed in paragraph 617 (to the extent upheld by this order).”
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