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NCLAT upholds penalty for Google

Sets aside 4 other CCI directions against the tech giant

Google, ADIF
In December, however, both Apple and Google told the parliamentary Standing Committee on Finance that the majority of the app developers do not pay a commission to them for using their respective app stores.

The National Company Law Appellate Tribunal (NCLAT) on Wednesday upheld the `1,338-crore penalty imposed by the Competition Commission of India (CCI) on Google, but also provided substantial relief to the tech giant by way of modifying four key clauses of the antitrust regulator’s order.

As a result, Google will now not need to allow hosting of third-party app stores on its Play Store or allow users to remove its pre-installed apps such as Google Maps, Gmail and YouTube.

Google can also continue to place curbs on distributing apps through sideloading and need not share its proprietary Play Services APIs (Application Programme Interface) with rivals, original equipment makers (OEMs) and developers.

So, in effect, while the NCLAT order has upheld the CCI verdict which found Google guilty of abusing its dominant position, it has restored the manner in which the tech giant operated its Play Store and other services which govern the Android ecosystem.

Among the directions by CCI upheld by the NCLAT, the most important is that Google will allow the users, during the initial device setup, to choose their default search engine for all search entry points.

It also upheld five other directions of CCI — like OEMs shall not be forced to pre-install the bouquet app and licensing of Play Store to OEMs shall not be linked with the requirement of pre-installing Google apps. The CCI directions that Google will not offer incentives to OEMs for ensuring exclusivity for its search services; it will not impose anti-fragmentation obligations on OEMs; and it will not incentivise OEMs for not selling smart devices based on Android forks were also upheld.

Simply put, out of the 10 directions issued by the CCI to Google on October 20, 2022, the NCLAT has upheld six and modified four. This would give an opportunity to both CCI and Google to appeal against the order in the Supreme Court.

“We are grateful for the opportunity given by the NCLAT to make our case. We are reviewing the order and evaluating our legal options,” a Google spokesperson said soon after the order.

“NCLAT seems to have taken a balanced view by adopting an ‘effects analysis’ approach and has taken care of interests of all the stakeholders,” said GR Bhatia, partner at Luthra and Luthra Law Offices India.

Google was in January directed by the SC to deposit 10% of the penalty amount. It will now have to deposit the balance within 30 days.

The CCI had imposed a `1,337.76-crore penalty on Google in October 2022 for abusing its dominant position in multiple markets in the Android mobile device ecosystem and had issued a cease-and-desist order against the firm from indulging in anticompetitive practices. The CCI had also directed Google to modify its conduct within a defined timeline.

Google had then filed a plea with NCLAT, which had declined to give an interim stay. It had also paid 10% of the penalty amount. The company had then approached the apex court, which had also declined to stay the CCI order. It had, however, directed the NCLAT to decide on Google’s appeal by March 31.

In the marathon hearing by the NCLAT spread over five weeks, senior counsels Arun Kathpalia and Maninder Singh argued the case on behalf of Google, while additional solicitor general N Venkatraman argued on behalf of the CCI. The bench also heard interventions by other parties, including MapmyIndia, Epic Games and Indus OS, which also contended that Google’s policies impacted them adversely.

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First published on: 30-03-2023 at 05:30 IST