Why in news?

• Google has filed an appeal in the Supreme Court against a verdict by the National Company Law Appellate Tribunal (NCLAT).
• In March 2023, NCLAT had partially upheld Competition Commission of India’s (CCI) Android dominance order against Google.
  • CCI is a statutory body established in March 2009 under the Competition Act, 2002 with an aim to eliminate practices having adverse effect on competition.

What’s in today’s article?

• National Company Law Appellate Tribunal (NCLAT)
• Background of the present case
• News Summary

National Company Law Appellate Tribunal (NCLAT)

• About
  • NCLAT is a quasi-judicial body in India that was established under the Companies Act, 2013 to hear appeals against the orders passed by the National Company Law Tribunal (NCLT).
  • Established in 2016, it is headquartered in New Delhi.
  • It is the second-highest forum for company law cases in India after the Supreme Court.
  • The decisions of the NCLAT are final and binding on the parties involved.
    • The orders passed by the NCLAT can be challenged only in the Supreme Court of India.
• Functions
• The NCLAT is empowered to hear appeals against orders passed by the NCLT related to insolvency and bankruptcy, merger and acquisition, and company law matters.
• It is also the Appellate Tribunal for order passed by the Competition Commission of India (CCI) as well for orders of the National Financial Reporting Authority.
• Composition
  • The NCLAT is headed by a Chairperson and consists of judicial and technical members who are appointed by the Central Government.

Background of the case

• In 2018, Android users moved the competition watchdog (CCI) alleging that Google was abusing its dominant position in the mobile operating system-related market.
• The CCI subsequently ordered an investigation by the director general (DG) of its investigative arm into this matter.
• In 2019, the CCI expressed a prima facie opinion that current practices followed by Google amounted to the imposition of unfair conditions on device manufacturers.
• In October 2022, based on the report of DG, the commission imposed a penalty of Rs 1,337.76 crore on Google.
  • This was the second time that the tech giant has been fined by the CCI.
  • In 2018, it had imposed a fine of Rs 136 crore on Google for unfair business practices in the Indian market for online search.
• This ruling was challenged before the NCLAT, which in turn, partially upheld the the CCI’s order in the case.

Why CCI had fined Google?

• CCI said that Google used its dominant position to make it mandatory that original equipment manufacturers (OEMs) pre-install its entire Google Mobile Suite on their phones and place them prominently.
  • The Mobile Suite includes Search, Chrome, YouTube, Google Play store, Maps, and Photos, among others.
• The CCI found that this mandate amounts to imposition of unfair conditions on the device manufacturers.
  • Hence, it was in contravention of the provisions of the Competition Act, 2002.
  • As per the provisions of this act, there shall be an abuse of dominant position if an enterprise directly or indirectly, imposes unfair or discriminatory condition in purchase or sale of goods or services.

How CCI wanted Google to change?

• Apart from imposing monetary penalty, the commission has issued cease and desist orders against Google from indulging in the found anti-competitive practices.
• It also says that OEMs should not be mandated to choose Google’s proprietary applications and services to be pre-installed and placed as Google says.
• It is also told to not restrict uninstalling of its pre-installed apps by the users.
• The Commission also said that Google will have to allow users to choose their default search engine during the initial device setup.

News Summary: Google Moves Supreme Court Against NCLAT Order

Why has Google appealed the NCLAT order?

• Google acknowledged that the NCLAT made a correct decision by stating that harm resulting from anti-competitive behavior must be proven.
• However, Google also pointed out that the NCLAT failed to apply this requirement to some of the directions given by the CCI that were upheld.
• Hence, Google decided to present its case before the Supreme Court demonstrating how Android has benefitted Indian users, developers, and OEMs, and powered India’s digital transformation.

What did the NCLAT order entail?

• No confirmation bias in CCI’s order
  • NCLAT held that the CCI's order does not suffer from any confirmation bias.
  • Hence, it upheld the penalty of ₹1,337 crore imposed on Google by the CCI for its anti-competitive conduct in the Android ecosystem.
• Anti-competitive practices by google
  • Furthermore, NCLAT has held that Google asking the OEMs to pre-install the entire Google Suite of 11 applications amounts to imposition of unfair conditions.
  • Google reduces the incentive of the OEMs to develop their own version of Android (Android forks).
• Directions by NCLAT that were in Google's favour
  • Google was fair in sending warnings (Side loading) to users when they download applications directly from the website or from an unknown source.
  • Google need not share its proprietary Application Program Interface (API) with third parties.
  • Google was right in not permitting third party application stores on its play stores to avoid malware.
  • Google can restrict uninstallation of Google suite apps on Android phones.

Could the order on Google shape India’s internet regulations?

• The verdict opens the gate for the government to formulate substantive regulations to ensure that such an abuse of dominance can be curtailed in the future.
• As per the experts, this judgement sets the stage for dual regulators in the online space for various sectors.
• One will be a nodal regulator and one will be a sectoral regulator, who will both work together in framing rules for the respective sector and regulate it.