NCLAT Agrees to Hear Google’s Plea Against CCI’s Penal Order, Declines Immediate Stay

January 04, 2023 14:04 IS

New Delhi [India]4 JANUARY (ANI): The National Company Law Appellate Tribunal (NCLAT) on Wednesday agreed to hear Google’s plea against the Competition Commission of India (CCI) order imposing a Rs 1337 crore penalty for alleged violations in the Android ecosystem – impose on mobile devices.
NCLAT issued a notice to CCI on Wednesday asking for a response to Google’s request. NCLAT admitted the cause of action and asked Google to pay 10 percent of the fine to prove its creditworthiness. Meanwhile, the tribunal refused to immediately suspend the CCI’s penalty order.
The next hearing on Feb. 13 on the question of staying the sentence and the main hearing on the plea will be held on April 3, the court said.
On October 20, 2022, the Competition Commission of India (CCI) fined tech giant Google Rs .
The Commission also instructed Google to change its behavior within a specified period.
The Commission had investigated various practices by Google in relation to the licensing of the Android mobile operating system and various proprietary mobile applications owned by Google, namely Play Store, Google Search, Google Chrome and YouTube.
During the course of the investigation, Google argued about the restraints on competition faced by Apple, CCI said in a statement.
In terms of understanding the level of competition between Google’s Android ecosystem and Apple’s iOS ecosystem, the Commission said it identified the differences in the two business models, which impact the underlying incentives behind business decisions.
The commission said that Apple’s business is primarily based on a vertically integrated smart device ecosystem focused on selling high-end smart devices with cutting-edge software components. While Google’s business has been driven by the ultimate intention of increasing the number of users on its platforms to interact with its revenue-generating service, an online search directly impacts Google’s sales of online advertising services.

Furthermore, with regard to app stores, the Commission found that the demand for them comes from three different groups of consumers with smart device original equipment manufacturers (OEMs) who wish to install an app store to make their smart devices commercially viable and marketable; App developers who want to offer their services to end users; and end users want to access app stores to access content or other services.
The Commission stated that it had examined the substitutability between Google’s Play Store for Android OS and Apple’s App Store for iOS from the point of view of all three customers and found that there was no substitutability between Google’s Play Store and Apple’s App Store.
The commission also found that there might be some competition between the two mobile ecosystems – Android and Apple – but it is also limited at the time of the purchase decision. On the basis of its assessment, the Commission found that Google is dominant in all relevant markets mentioned.
The CCI concluded that the mandatory pre-installation of the entire Google Mobile Suite (GMS) on MADA (with no uninstall option) and its prominent placement amounts to the imposition of unfair terms on device manufacturers and thereby violates the provisions of Section 4(2) (a)(i) of the relevant law. These obligations also pose as ancillary obligations that Google imposes on OEMs, in violation of Section 4(2)(d) of the Act.
Google maintained its dominant position in the online search market, resulting in competing search apps being denied market entry in violation of Section 4(2)(c) of the Act.
It also concluded that Google used its dominant position in the app store market for Android operating systems to protect its position in general online search in violation of Section 4(2)(e) of the Act , and that Google will leverage its dominance in the Android OS app store market to enter the non-OS web browser market through the Google Chrome app and protect its position.
It found that Google used its dominant position in the app store market for Android operating systems to enter the OVHP market via YouTube and protect its position, thereby violating the provisions of Section 4(2)( e) violated the law.
The CCI also concluded that by making the pre-installation of Google’s proprietary apps (particularly Google Play Store) conditional on the signing of AFA/ACC for all Android devices manufactured/distributed/marketed by device manufacturers, the CCI made Google dependent on the Reduced the device’s ability and incentive for manufacturers to develop and sell devices running alternative versions of Android, ie Android forks, thereby restricting technical or scientific development to the detriment of consumers, in violation of the provisions of Section 4(2)(b)(ii) of the Act.
The CCI also noted some measures, including that Google should not incentivize or otherwise oblige OEMs not to sell smart devices based on Android forks, and should not restrict users from uninstalling its preinstalled apps.
Regarding the calculation of the penalty, the CCI found that there were glaring inconsistencies and sweeping disclaimers in Google’s presentation of various revenue data points.
“In the interest of fairness and with the intention of ensuring the necessary market correction as early as possible, the CCI has quantified the preliminary fines based on the data provided by Google. Accordingly, the CCI imposed a penalty of Rs. 1,337.76 crores for provisionally charging Google with violating Section 4 of the Act,” according to a CCI press release. Google has been given 30 days to provide the necessary financial details and supporting documents (ANI)