BREAKING: NCLAT upholds CCI's ₹1,337 crore penalty on Google for abuse of dominant position, but sets aside key directions

The National Company Law Appellate Tribunal (NCLAT) on Wednesday upheld the ₹1,337.76 crore fine imposed by the Competition Commission of India (CCI) on Google for abuse of its dominant position in the Android market..However, in a major relief for the tech giant, the Bench of NCLAT Chairperson Justice Ashok Bhushan and Dr Alok Srivastava, Member (Technical), set aside four key directions issued by the CCI.The Court aside the directions issued in paragraphs 617.3, 617.9, 617.10, and 617.7 of the CCI order. Here is a brief summary of what these directions stated: .Paragraph 617.3 -- Google shall not deny access to its play services Application Programming Interface (APIs) to disdvantage Original Equipment Manufacturers (OEMs), app developers and its existing or potential competitors.Paragraph 617.7 -- Google shall not restrict uninstalling of its pre-installed apps by the users.Paragraph 617.9 -- Google shall allow the developers of app stores to distribute their app stores through Google Play Store.Paragraph 617.10 -- Google shall not restrict the ability of app developers in any manner to distribute their apps through side-loading..In a detailed order, the Appellate Tribunal found that the investigation conducted by CCI into Google's conduct was not in violation of principles of natural justice. The order also held that the pre-installation of entire Google Mobile Services (GMS) on Android phones does amount to unfair use. "The Appellant by making pre-installation of GMS suite conditional to signing of AFA/ACC for all Android devices manufacturers, has reduced the ability and incentive of devices manufacturers to develop and sell self-device operating or alternative version of Android and Android Forks and thereby limited technical and scientific development, which is breach of provisions of Section 4(2)(b)(ii) of the Act," the Tribunal held. .NCLAT had reserved its orders in the matter on March 20. The Appellate Tribunal had earlier refused to grant any interim relief to Google. The matter then travelled to the Supreme Court, which also denied relief to the company. However, the apex court requested the NCLAT to decide the matter by March 31..In addition to the penalty, the CCI also directed Google to cease and desist from participating in anti-competitive practices and directed it to modify its conduct within a defined timeline. The Commission had found:Mandatory pre-installation of the entire Google Mobile Suite with no option to un-install the same amounts to imposition of unfair condition on the device manufacturers;Google used its dominant position in the online search market resulting in denial of market access for competing search apps;Google leveraged its dominant position in the app store market for Android OS to protect its position in online general search;Google leveraged its dominant position in the app store market for Android OS to enter as well as protect its position in online video hosting platform (OVHP) market through YouTube;Google, by making pre-installation of Google’s proprietary apps (particularly Google Play Store) reduced the ability and incentive of device manufacturers to develop and sell devices operating on alternative versions of Android..The Commission thus issued the following directions to Google which could aid in modifying its conduct:OEMs should not be forced to pre-install a bouquet of applications, and and shall not be restrained from deciding the placement of pre-installed apps, on their smart devices;Licensing of Play Store to OEMs shall not be linked with the requirement of pre-installing Google search services, Chrome, YouTube, Google Maps, Gmail or any other app;Google shall not offer any monetary or other incentives to OEMs for ensuring exclusivity for its search services;Google shall not incentivise or obligate OEMs for not selling smart devices based on Android forks.Google shall not restrict uninstalling of its pre-installed apps by the users;Google shall allow 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..Below is a brief summary of arguments made before the NCLAT..Arguments for Google LLC.Senior Advocate Arun Kathpalia appeared for Google LLC and argued that CCI's order suffers from confirmation bias and is based on a similar order of the European Commission (EC) in 2018.It was stated that the company's agreements do not prevent equipment manufacturers from pre-installing competing apps with similar functionality.Kathpalia refuted the CCI finding that Google reduced the ability and incentive for manufacturers to develop and sell devices operating on alternative versions of Android by making pre-installation of Google's apps mandatory.He further said mere dominance in a market does not mean abuse of dominance, and the reason Google is popular among users is because of its effectiveness. Google is the most searched term on Bing, the search engine owned by Microsoft, Kathpalia said..Arguments for CCI.Additional Solicitor General (ASG) N Venkataraman presented the CCI's case before the NCLAT.He said that Google's policies in India can be summed up in five phrases: digital feudalism, digital slavery, technological captivity, chokepoint capitalism and consumer exploitation.He argued that the companies that did not sign Google's contracts have gone extinct. NCLAT was told that all these agreements are linked to one another, and cannot be signed independently.It was stated that Google abused its dominant position in the Android Operating System (OS) market to indulge in unfair trade practices by restricting entry of other applications in its Play Store.The ASG further submitted that Google controls nearly 98% of the smartphone market in the country, and if it is found to be violating competition laws, the regulator is duty bound to direct the company to mend its ways..Senior Advocates Maninder Singh and Arun Kathpalia along with a team of lawyers from AZB & Partners and Economic Laws Practice including Hemangini Dadwal, Parthsarathi Jha, Toshit Shandilya, Mohith Gauri, Sayobani Basu, Arunima Chatterjee, Ketki Agrawal, Vanya Chhabra, Atish Ghoshal, Bhaavi Agrawal, Deepanshu Poddar, Abhisar Vidyarthi, Kshitij Wadhwa, Ajay Sabharwal and Prabhas Bajaj appeared for Google LLC and Google India.Advocates Samar Bansal, Manu Chaturvedi, Aakriti Singh and Vedant Kapur assisted ASG Venkataraman for CCI.A team of lawyers from Sarvada Legal and Shardul Amarchand Mangaldas including Abir Roy, Vivek Pandey, Aman Shankar, Sukanya Viswanathan, T Sundar Ramanathan, Naval Chopra, Yaman Verma, Aman Singh Sethi, Raveena Lalit, Prerna Parashar, Parinita Kare, Shally Bhasin, Prateek Yadav, Naval Chopra, Yaman Verma, Aman Singh Sethi, Raveena Lalit, Prerna Parashar, Parinita Kare, Shivek Endlaw and Rohan Bhargava appeared for the three intervenors..[Read Order]