SC refuses Google stay on CCI order on ₹1,337 cr penalty
As Google was to comply with the Competition Commission of India (CCI)’s order by today, the court extended the time for compliance by a week
The Supreme Court on Thursday refused to stay the order passed by the National Company Law Appellate Tribunal (NCLAT) directing Google to deposit 10% of a penalty of ₹1,337 crore imposed by the Competition Commission of India (CCI) on the finding of abuse of its dominant position in the Android ecosphere.
A bench headed by Chief Justice of India (CJI) Dhananjaya Y Chandrachud said, “Findings of CCI cannot be said to be without jurisdiction or suffering from manifest error,” and refrained from making any observations on the arguments made by CCI and other app manufacturers, realising that it could impact the proceedings filed by Google before the NCLAT in its appeal against the CCI’s October 20 order.
The bench, also comprising justices PS Narasimha and JB Pardiwala, allowed Google to approach the NCLAT with this order in three days. It expedited the hearing by requesting the tribunal to decide the matter before March 31. As the US tech firm was to comply with the CCI order on a set of directions by January 19, the court extended the time for compliance by a week.
The order of the court came despite Google agreeing for part-compliance with the CCI order. The court had asked Google on previous occasions whether it was willing to have same set of compliance for Indian market as directed by the European Commission (EC) in July 2018 on a finding of dominance by Google in the Android ecosystem.
Senior advocate Abhishek Manu Singhvi, who appeared for Google, told the court that without prejudice to its appeal in NCLAT, the company was willing to comply on four aspects of the October 20 order. This included unbundling of Search and Chrome apps as also Chrome from Search app from the bouquet of pre-loaded apps offered to Android device manufacturers, exclusivity to Google search services, and allowing smartphone and tablet makers to produce without Google’s proprietary applications of Play and Search pre-installed.
Singhvi sought 45 days time to comply with these directions. In addition, he even agreed to provide a choice screen for customers giving them the option to choose their default search engine during initial device setup. As this required structural change, Singhvi offered to get it done in four months even as in Europe, the company was given nine months to implement the same.
The court told Singhvi, “We cannot lose sight of the peculiarity of Indian market – its width, depth and penetration in global market. In comparing with level-playing field as in Europe, the bench added, “The European Union can be a benchmark for us so that we don’t fall behind. But we can certainly move ahead of them. Look at the nature of our market and EU market.”
Google claimed that its presence in Indian market had nothing to do with dominance but excellence. “If people choose Google, this is not dominance but excellence. I am the market leader by my excellence and this court promotes excellence in every trade.” Underscoring the importance of Android system behind the smartphone boom in India, he explained the extent of Google’s coverage across 500 million devices across 1,500 Android models.
The court said, “This data goes against your submission. If you have such market penetration, when you necessitate on taking your bouquet, you compromise the open platform and militates against the Android ecosystem. It also affects the choice available to consumers.”
Additional solicitor general (ASG) N Venkatraman appearing for CCI said that the October 20 ruling came after four years of enquiry which found that the policies of Google were anti-competitive restricting the choice of consumers and manufacturers as well. He objected to stay of the CCI direction and said that the company had complied with similar directions in EU within three months and was seeking stay from adopting the same course of action in India.
“This is a direct ridicule on a constitutional authority after four years of enquiry. Post EC decision, see their conduct there and here,” ASG Venkatraman said. Referring to Google’s apprehension that allowing third party apps on Play Store will cause security threat of malware, ASG said, “When you do it in Europe, there is no security threat but in India there is security threat. Their talk about security is market slavery. This is completely feudalistic.”
Figures provided by CCI showed that in 2018, Google was the operating system of over 98% smartphones while its App store for Android smartphones had 100% dominance due to pre-installation. In the general web search, Google had 98% dominance in India since 2009 and in the online video hosting platform, Google-run YouTube had 88% coverage.
ASG explained to the court that Google gets an upper hand through the Mobile Application Distribution Agreement (MADA) which is not a voluntary choice but a compulsive one for device manufacturers. This mandates pre-installation of 11 apps called Google mobile services (GMS) as a bundle, prohibits installation or uninstallation of individual GMS apps, and mandates premium placement of these apps on the mobile/tablet screen. “All this translates into statutory infraction. It results in a status quo bias as nobody can break this necklace which is a chain of apps that mutually attract each other,” CCI submitted.
The commission further stated that anti-competitiveness was the goal set by India for 2026 where it seeks to attract global players in the field of electronics and sustain local manufacturers as the aim is to promote public monopoly and not private monopoly. “Competition law democratises. Any stay now will be shown by them till this court finally decides on the matter,” Venkataraman said.
While Google argued that non-grant of stay will lead to irreversible results as software proprietary once given to all cannot come back. The company further claimed that this will also result in prices of Android devices shooting up. The CCI negated these submissions.
Senior advocates Mukul Rohatgi and Jayant Mehta appearing for private app manufacturers told the court that the directions by CCI are in the realm of technology which can be enabled or disabled any time and hence there is no fear of irreversibility. Rohatgi said, “There is no reason for the petitioner to treat this country and its laws as Third World.”
The court refused to decide on the rival claims stating, “Any expression of opinion by this court on merits will affect the case before NCLAT.” It went on to add, “Since the appellant (Google) are pursuing their remedy in NCLAT, the time for compliance with order of CCI is extended by a period of one week.”
