Case Study: Google LLC v. Competition Commission of India (CCI)

“Dominant firms shall not engage in anti-competitive practices, such as imposing unfair conditions or denying market access, and an effect analysis is necessary to prove abuse of dominance under the Competition Act, 2002.” 

Citation: Competition Appeal (AT) No.01 of 2023

Date of Judgment: 29^th March, 2023

Court: National Company Law Appellate Tribunal

Bench: Ashok Bhushan (J)

Facts

• Google LLC and its Indian subsidiary, Google India Private Limited (‘Google’), challenged the order passed by the Competition Commission of India (CCI) before the National Company Law Appellate Tribunal (NCLAT). The CCI had found Google guilty of abusing its dominant position in the Android mobile device ecosystem, in violation of several provisions of the Competition Act, 2002 (‘Act’). The CCI imposed a penalty of INR 1337.76 crore under Section 27(b) of the Act[1] and directed Google to cease its anti-competitive practices. Google’s appeal was ultimately dismissed, and the penalty was upheld, although some directions issued by the CCI were set aside.
• The case originated from a complaint filed by Umar Javeed, Sukarma Thapar, and Aaqib Javeed under Section 19(1)(a) of the Act[2], alleging that Google’s practices in India’s Android-based smartphone market were anti-competitive. The complaint highlighted four relevant markets:

1. Licensable Smart Mobile OS
2. App Stores for Android Mobile OS
3. Online Video Hosting Platform (OVHP)
4. Online General Web Search Service

• After a preliminary conference held on January 8, 2019, the CCI directed its Director General (DG) to investigate under Section 26(1) of the Act[3]. Based on the evidence, the CCI concluded that Google had violated several provisions of Section 4(2) of the Act[4]. Google was penalized INR 1337.76 crore and was instructed to pay the amount within 60 days of the order.
• The CCI found Google guilty of imposing anti-competitive conditions, particularly through the mandatory pre-installation of its Google Mobile Suite (GMS), which included apps like Google Search, Chrome, and YouTube. The findings highlighted that these practices denied device manufacturers (OEMs) the flexibility to choose which apps to pre-install and prevented competition in the app store and online search markets. Google’s agreements also limited the ability of OEMs to develop and promote alternative versions of Android, restricting technical innovation.

Decision of the CCI

The CCI identified several anti-competitive practices by Google, including:

• Mandatory pre-installation of the entire GMS Suite, with no option for OEMs to uninstall these apps.
• Leveraging its dominance in the Play Store market to protect its position in the online general search and OVHP markets.
• Imposing conditions on OEMs that limited their ability to develop or sell devices running Android forks.

To address these concerns, the CCI issued several directions to Google, including the following:

• OEMs should not be forced to pre-install a bouquet of Google’s apps.
• Licensing of the Play Store to OEMs should not be tied to the pre-installation of Google Search, Chrome, YouTube, or other apps.
• Users should have the option to uninstall pre-installed apps and choose their default search engine during the initial device setup.

Decision of the NCLAT

The NCLAT upheld the penalty imposed by the CCI but set aside certain directions:

• Google was no longer required to allow app developers to distribute their app stores through the Google Play Store.
• Google was not obligated to provide unrestricted access to its Play Services API.
• The requirement to allow users to uninstall pre-installed apps was removed.
• Google was not compelled to permit app developers to distribute their apps through side-loading without restrictions.

Key legal issues discussed

1. Is an ‘effect analysis’ required to prove abuse of dominant position under Section 4[5] of the Competition Act, 2002?

Yes

The NCLAT clarified that proving abuse of dominance requires an analysis of the anti-competitive effects of the alleged conduct. The test employed evaluates whether the conduct restricts competition or harms market access. In this case, the CCI had examined the evidence and established that Google’s practices were anti-competitive and resulted in harm to competition.

2. Does pre-installation of the entire GMS Suite impose unfair conditions on OEMs under Section 4(2)(a)(i)[6] and 4(2)(d)[7]?

Yes

The NCLAT affirmed that mandatory pre-installation of the GMS Suite constituted an unfair condition. This requirement limited OEMs’ ability to offer competing apps and restricted their freedom to design devices with alternative operating systems.

3. Did Google’s practices result in denial of market access for competing search apps, breaching Section 4(2)(c)[8]?

Yes

The Tribunal upheld the finding that Google’s dominance in online search and its policies on Android devices restricted access for competing search apps. By mandating the use of its own search services, Google denied market access to other search providers.

4. Was the DG’s investigation vitiated due to leading questions?

No

The NCLAT rejected Google’s contention that the investigation was biased. The Tribunal held that the DG’s questions were consistent with the principles of natural justice and did not invalidate the findings.

5. Was the penalty imposed on Google disproportionate?

No

The NCLAT held that the penalty was proportionate and based on Google’s relevant turnover in India. The CCI had accurately calculated the penalty by considering revenue derived from the Android ecosystem and related operations.

Way Forward

This case underscores the importance of regulating dominant digital platforms to maintain fair competition. By upholding the penalty, the NCLAT emphasized the need for large tech firms to comply with competition laws. At the same time, the modifications to the CCI’s directions reflect a balanced approach to ensuring effective remedies without imposing disproportionate restrictions on businesses.

Google has been directed to deposit the penalty amount within 30 days of the order. The company must also align its policies with the remaining CCI directives to avoid further regulatory scrutiny. This case serves as a precedent for addressing anti-competitive practices in the digital economy and highlights the growing regulatory focus on Big Tech.

[1] The Competition Act, 2002, s. 27(b).

[2] Id. at s. 19(1)(a).

[3] Id. at s. 26(1).

[4] Id. at s. 4(2).

[5] Id. at s. 4.

[6] Id. at s. 4(2)(a)(i).

[7] Id. at s. 4(2)(d).

[8] Id. at s. 4(2)(c).

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