Google finds no interim relief in App store case

SC agrees to examine Google’s plea on Jan 16 against CCI’s penalty of Rs 1,337.76 crore
Google CEO Sundar Pichai
Google CEO Sundar Pichai

NEW DELHI: In a setback for Google, an appellate tribunal on Wednesday refused an interim stay on the competition regulator imposing a Rs 936-crore penalty on the US tech giant for abusing its dominant position in the market.

The National Company Law Appellate Tribunal directed Google to deposit 10 per cent of the fine that was slapped by the Competition Commission of India in a case related to its Play Store policies.

A week back, Google failed to get relief from the NCLAT on a separate Rs 1,337.76 crore fine imposed by CCI on alleged abuse of the dominant position that the US tech giant has in the Android smartphone operating system in the country. It was asked to deposit 10 per cent of the fine within four weeks.

Google challenged that order before the Supreme Court, which agreed to hear it on Monday.

While in the first case, CCI had in October last year asked Google to allow smartphone users on the Android platform to uninstall apps and let them select a search engine of their choice, the regulator had stated that the company to take corrective steps on policies that forced developers to use Google Play's billing system to list their apps on its Play Store.

A two-member bench of NCLAT comprising Justice Rakesh Kumar and Alok Srivastava on Wednesday issued notices to CCI and posted the matter for hearing on April 17, 2023.

A mail sent to Google for comments did not elicit a response.

Senior advocate Harish Salve said that the US firm has appealed the Play Store and Android decisions because the Commission failed to account for the adverse impacts on users, developers and manufacturers.

Google will, in the hearings before the NCLAT, endeavour to establish that the CCU's directions put in peril technology, security and the choice that Play and Android provide.

It will also endeavour to establish that the Commission failed to consider the benefits of Play and Android to Indian end-users, including benefits such as enabling mobile access (and furthering the goal of increased teledensity, which is at the heart of the push for Digital India) as well as protecting end-users from malware and abusive billing practices.

Google's business model for its Play Store is linked to the business model of the app developers. When app developers distribute their apps for free, there is no charge. Where the app developers sell their apps or sell digital content within the app to the end-users, Google receives a service fee.

This, Google says, has been done for technical, security and commercial reasons. On October 25, CCI imposed a penalty of Rs 936.44 crore on Google for abusing its dominant position with respect to its Play Store policies. The regulator had also directed the company to cease and desist from unfair business practices as well as carry out various measures to address the anti-competitive issues within a defined timeline.

Google had subsequently said it is “pausing” enforcement of the requirement for developers to use Play’s billing system for the purchase of digital goods and services for transactions by users in India while it reviews legal options, in the aftermath of the recent ruling by the CCI.

Google has so far said the CCI decision will force it to change its long-standing business model, but its Supreme Court filing for the first time quantifies the impact and details the changes the company will need to make.

Google will need to modify its existing contracts, introduce new license agreements and alter its existing arrangements with more than 1,100 device manufacturers and thousands of app developers, it says.

“Tremendous advancement in growth of an ecosystem of device manufacturers, app developers and users is at the verge of coming to a halt because of the remedial directions,” stated Google’s filing, which is not public. “Google will be required to make far-reaching changes to the Android mobile platform which has been in place for the last 14-15 years.”

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