NCLAT upholds penalty on Google
Polity & Governance
7th Apr, 2023
The National Company Law Appellate Tribunal (NCLAT) has upheld a penalty imposed by Competition commission of India (CCI) on Google for its anti-competitive conduct in the Android ecosystem.
Key-highlights of the ruling:
- The tribunal held that a number of Google’s practices pointed to an abuse of dominance, which in some cases, had also stalled scientific development.
Abuse of dominance
- In simple terms ‘dominant position’ means something in a superior position as compared to others based on some factors.
- Abuse of dominant position includes:
- Imposing unfair condition or price
- Predatory pricing
- Limiting production/market or technical development
- Certain barrier to entry
- It held that mandating pre-installation of its entire Google Mobile Suite (GMS) – a family of key Google apps and services– amounted to “imposing unfair conditions on Original equipment manufacturer (OEMs) which is an abuse of dominant position” by the company.
- By bundling products like its search engine or the Chrome browser, Google had perpetuated its dominant position.
- NCLAT stated that the CCI in its order against Google did not violate the principles of “natural justice” and based it on relevant material submitted to it.
What is Android?
- Android is an open-source mobile Operating System (OS), which was acquired by Google in 2005. Smartphones need an OS to run applications and programs. Google’s Android is the dominant mobile OS, powering over 95 per cent of India’s smartphones.
- Google operates and manages the Android OS and licenses other Google proprietary applications such as Chrome, Gmail, Maps, YouTube, Play Store, etc.
- Original Equipment Manufacturers (OEMs) or smartphone manufacturers use Android and through it, Google’s apps on their mobile phones.
Restrictions placed by Google
- Google licences Android as well as its various applications (Play Store, Search, YouTube, Maps, Gmail, etc.) to smartphone OEMs for pre-installation in mobile devices, through various agreements viz., MADA, AFA/ ACC and RSA.
- Mobile Application Distribution Agreement (MADA)
- OEMs are required to pre-install the entire Google Mobile Suite (GMS) covering 11 applications of Google as a bundle, and place these apps on the home screen of the device.
- GMS is a collection of Google applications and Application Programme Interface (APIs) that help support functionality across devices.
- GMS includes wide range of key Google apps such as Google Maps, Gmail, YouTube, etc.
- Anti-fragmentation Agreement (AFA): The OEMs which have chosen to pre-install Google’s apps on their mobile devices are restricted from manufacturing and marketing not only smart mobile devices but also any smart device (viz. smart speakers, smart watches, smart TVs, smart navigation system, etc.), on alternative versions of Android.
- Revenue Sharing Agreement (RSA): Google pays share from its advertisement revenue to OEMs in exchange for exclusive installation of its search services on their smart mobile devices.
CCI’s allegations on Google:
- Competition commission of India earlier found Google guilty for undertaking anti-competitive practices.
- The Competition Commission of India (CCI) says that Google’s business was found to be driven by the "ultimate intent of increasing users on its platforms”.
- Issues cited by CCI:
- Google was found abusing its dominant position in multiple markets with its Android mobile operating system (OS).
- It has used its dominant position in the online search market, resulting in the denial of market access to competing apps.
- It has done the same in the Android app store market to protect its position in online general search, which violates competition law.
National Company Law Appellate Tribunal (NCLAT):
- National Company Law Appellate Tribunal (NCLAT) was constituted under Section 410 of the Companies Act, 2013 for hearing appeals against the orders of National Company Law Tribunal(s) (NCLT), with effect from 1st June, 2016.
- Competition Commission of India (CCI):
- CCI is a statutory body responsible for enforcing the Competition Act, of 2002.
- It was duly constituted in March 2009.
- The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act) was repealed and replaced by the Competition Act, 2002, on the recommendations of the Raghavan committee.
- Composition: The Commission consists of one Chairperson and six Members who shall be appointed by the Central Government.