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Google vs CCI: Who really won?

US tech major Google LLC’s battle with the Indian competition regulator has been anything but decisive.

The NCLAT agreed with the Competition Commission of India’s conclusion that Google abused its dominant position by mandating mobile manufactures to pre-install 11 of its apps. The National Company Law Appellate Tribunal also upheld that tying up Google Chrome App and YouTube with Play Store is anti-competitive. However, the appellate tribunal also diluted the corrective measures that the CCI had directed Google to take.

So, who won at the NCLAT? The answer lies in the commercial implications of the remedies the tribunal has upheld versus those it has not.

All directions that have been set aside by the NCLAT have been done so either in the larger interest of the users or because they flow from the fundamental principle of competition law, which is the freedom to carry on trade, according to GR Bhatia, partner at Luthra & Luthra.

Overall, the appellate tribunal’s order is good in the sense that it is very sensitive to innovation, Rahul Singh, associate professor at the National Law School of India University, Bengaluru, told BQ Prime.

What’s Set Aside?
The NCLAT held that out of the 10 directions that were issued by the CCI, four are unsustainable. These are:

CCI had said that Google can’t restrict access to its Play Services application programming interfaces in a way that hurts original equipment manufacturers, app developers or its current or future competitors. Allowing API access to these stakeholders will make it easy for app developers to move their apps to Android forks, that is a modified version of Android based on open source code.

Google shall not stop users from removing apps that came pre-installed on their devices.

App store developers shall be allowed to use Google’s Play Store to distribute their products.

Google shall not impose any restrictions on app developers’ ability to use the side-loading method of app distribution.

Google’s Big Win
If Google made its APIs available, it would enable developers to make their apps compatible with other versions of Android, the CCI had noted. But the NCLAT said it is reasonable for Google to restrict access of its proprietary APIs to third parties.

Bhatia agreed with the NCLAT’s conclusion on this aspect. He pointed out that since Google is the developer of the API, it is reasonable for Google to restrict the access of its proprietary API to third parties. “Google’s right over its own interface needs to be protected to encourage innovation.”

From Google’s perspective, this is a very important win, Kanika Chaudhary Nayar, partner at DSK Legal, told BQ Prime.

The CCI had given the direction that there should be unhindered access of these proprietary items to all the manufacturers, app developers and all its competitors. But the API’s are essentially proprietary items and they fetch value, Nayar added.

This direction being set aside is probably one of the most important for Google, she said.

The Other Smaller Wins For Google
Besides the APIs, the tribunal also set aside three other directions in the CCI’s October 2022 order.

Firstly, the NCLAT had said users have the liberty to install competing apps and even disable Google’s pre-installed apps. Therefore, the direction to Google in this respect was unnecessary. Nayar said the tribunal has rightly held that the CCI did not come to any finding of contravention before issuing these directions.

Secondly, Play Store access for competing app stores can be achieved by way of an agreement between parties.

According to Singh, without the Play Store, Epic Games Inc’s revenue might be like that of an orange. And because of the Play Store, their revenue might be like that of a watermelon.

Epic Games was one of the intervenors who was supporting the CCI’s case against the tech giant.

Thirdly, sideloading has to be curtailed by way of a warning to protect users against potential threats of malware.

The warning given is in the nature of a disclaimer and does not prohibit or block the download of an app through sideloading. Google only displays appropriate statutory warnings to users about the risks, Nayar said.

Giving a warning to the user of a potential malware threat is done in the larger interest of user safety and security and does not amount to an abuse of dominance, Bhatia said.

Where Did The CCI Score?
The NCLAT agreed with the CCI on six aspects. Here’s what Google will need to ensure:

  • Smartphone manufacturers will have the right to decide which of Google’s proprietary apps should be pre-installed on their smart devices, and their placement.
  • Pre-installation of Google search services, Chrome browser, YouTube, Google Maps, Gmail, or any other application cannot be a precondition for licensing of Play Store.
  • No payments, incentives shall be given to manufacturers to make Google’s search services exclusive on their devices.
  • Manufacturers should be able to make and develop Android-forks based smart devices without having to include Google’s proprietary apps.
  • No payments, deals to make sure smartphone makers don’t sell smart devices that are based on Android forks.
  • Allow users to choose which default search engine they want to use when the device is first set up.

The directions upheld by the NCLAT are same or similar to those objected to by the European Commission and Google has reportedly agreed to put a halt on those conducts in European markets, Bhatia said.

Realising that the CCI order explains very well in detail the rationale for discontinuation of these anti-competitive business practices and also noticing that Google ought not to have a differential approach in India, the NCLAT has not felt necessary to interfere with these directions. GR Bhatia, partner at Luthra & Luthra

They anticipate both the CCI and Google to appeal against the NCLAT’s decision before the Supreme Court.

“It may be useful for Google to appeal to the Supreme Court as this 40% victory at the appellate tribunal could be turned into something more,” Singh said. Bloomberg

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