Major setback for Google as NCLAT refuses interim stay on CCI order

Tribunal asks Google to deposit 10% of Rs 1,330 cr penalty levied by CCI; next hearing on April 3

In a big setback for Google, the national company law appellate tribunal (NCLAT) on Wednesday refused to grant an interim stay on the order of Competition Commission of India (CCI) directing the tech giant to change its business model in India.

While admitting Google’s appeal, NCLAT has asked Google to deposit 10 per cent of the penalty amount of Rs 1,330 crore levied by the CCI, thereby granting some relief on the monetary front. The next hearing on the matter is scheduled for April 3.

NCLAT said during the hearing that Google had approached the tribunal on the last day of a 60-day time limit to comply with the CCI order and that the tribunal did not see any urgency for contention.

Google had three months' time to comply with the CCI’s directions, which ends on January 19. With just over two weeks left until this deadline, there is speculation that Google India would have to move the Supreme Court on the matter before that.

“Google will have to start uninstalling its pre-loaded apps from Android phones, in order to comply with the CCI order. That changes their decade-old model,” an industry source said.

Google did not immediately comment on the NCLAT decision.  

NCLAT did not, however, hear the other appeals filed both in favour and against the CCI order by other companies. Micromax and Jaina Private Limited for India had filed an appeal supporting Google while MapmyIndia, OS Labs technology had filed impleadment plea in NCLAT in favour of CCI.

Last October, the anti-competitive authority of India, the Competition Commission of India (CCI), imposed a penalty of Rs 1,337.76 crore on Google for abusing its dominant position in multiple markets in the Android Mobile device ecosystem and violating Section 4 of the Act.

The Commission also ordered Google to cease and desist from engaging in unfair business practices, and asked it to modify its conduct within a defined timeline.

The CCI order is one-of-its kind, and has prompted the tech gaint say it would entail changing its core architechure of the Android ecosystem.

Google’s Android is the dominant operating system for smartphones in India and globally. The only other competition to this is Apple’s OS.

The commission delineated five relevant market for the matter these include market for licensable OS for smart mobile devices in India, app store for Android smart mobile OS in India, market for general web search services, market for non-OS specific mobile web browsers and market for online video hosting platform (OVHP) in India.

The CCI in its press statement said that it found “Google to be dominant in all the above mentioned relevant markets.”

CCI has now concluded that mandatory pre-installation of entire Google Mobile Suite (GMS) under mobile application and distribution agreement (MADA) (with no option to un-install the same) and their prominent placement amounts to imposition of unfair condition on the device manufacturers and thereby in contravention of the provisions of Section 4(2)(a)(i) of the Act.

Some of the measures that CCI has recommended include; OEMs shall not be restrained from (a) choosing from amongst Google’s proprietary applications to be pre-installed and should not be forced to pre-install a bouquet of applications, and (b) deciding the placement of pre-installed apps, on their smart devices.