NCLAT asks Google to deposit 10% of CCI penalty

In a blow to global tech behemoth Google Inc, the appellate tribunal NCLAT (National Company Law Appellate Tribunal) on Wednesday refused to stay the competition regulator's penalty on the company's India unit, Google India. While agreeing to hear Google's plea challenging the Competition Commission of India (CCI) penalty worth ₹1,337.76 crore for the violations related to the Android mobile device ecosystem, the tribunal issued notices to the fair competition regulator and sought its response.

A bench of Justice Rakesh Kumar and Dr Alok Srivastava, however, asked Google to deposit 10% of the penalty to show its bonafide. Deferring the hearing in the case, the appellate tribunal bench said Google’s plea regarding the interim relief and stay on the CCI order will be heard on February 13, 2022.

Google Inc last month approached the NCLAT, challenging the CCI's October order. It termed the CCI's order a "setback" for Indian users and businesses while vowing to stay the order. The CCI had slapped two penalties worth ₹1,337.76 crore and ₹936.44 crore on the company for "anti-competitive practices" in its Android Mobile ecosystem and Play Store policies.

“We believe it presents a major setback for our Indian users and businesses who trust Android’s security features and potentially raises the cost of mobile devices," said Google.

After the CCI order, Google had said it'll pause the enforcement of the requirement for developers to use Google Play's billing system for the purchase of digital goods and services for transactions by users in India. The requirement, however, still applies to users outside India.

As per the CCI’s order, it examined various Google practices regarding licensing of its Android mobile operating system and proprietary mobile apps like Play Store, Google Search, Google Chrome, and YouTube, among others. The mandatory pre-installation of the entire Google Mobile Suite under the mobile app distribution agreement -- with no option to uninstall and their prominent placement -- amounts to the imposition of an "unfair condition" on the device manufacturers, it said.

The competition regulator also accused Google of "perpetuating and leveraging" its dominant position in the online search and app store market. This, it said, denied market access to competing search apps and protected its position in online general search.

In its other order, the CCI said Google abused its dominant position with regard to its Play Store policies and issued a cease-and-desist order against the company. The CCI said it found "glaring inconsistencies and wide disclaimers" in revenue data points presented by Google. Accordingly, an additional penalty @ 7% of its average relevant turnover amounting to ₹936.44 crore was imposed on Google for the violations.

The CCI order said Google’s Play Store policies require the app developers to "exclusively and mandatorily" use Google Play's Billing System (GPBS). App developers can't, within an app, provide users with a direct link to a webpage containing an alternative payment method or use language that encourages a user to purchase the digital item outside of the app, it said.

In the wake of the order, Google CEO Sundar Pichai, in his visit to India last month, had said that the tech revolution in the country has supported small businesses and startups, and helped in cybersecurity, education, skill training, agriculture and healthcare.