Google Play Store Case: NCLAT Refuses To Stay CCI Penalty
NCLAT holds that placing a restrictive policy itself translates into an abuse of dominant position.
The National Company Law Appellate Tribunal refused to stay the penalty imposed by the competition regulator on Google’s parent, Alphabet Inc., in the Play Store case.
In October last year, the Competition Commission of India imposed a penalty of Rs 936 crore on the tech major for abusing its dominant position in the Unified Payments Interface market.
The investigation began in 2020 after the CCI found a prima facie case of anti-competitive practices by Google, which it noted has a unique advantage compared to other UPI app developers.
In its final order, the regulator noted that the Google Play Store constitutes the main distribution channel for app developers in the Android mobile ecosystem. It pointed out that the sale of in-app digital goods constitutes an important means for app developers to monetise their creations and innovations. To do so, developers are forced to configure their apps so that all purchases of digital goods go through Google’s payment system, which processes the transactions.
Google also employs anti-steering provisions, restricting app developers from providing their users with a direct link to an alternative payment method or using language that encourages a user to purchase the digital item outside of the app. If the app developers do not comply with Google’s policy of using Google Pay, they are not permitted to list their apps on the Play Store, CCI had said.
On Wednesday, arguing for Alphabet Inc., senior advocate Harish Salve said that there must exist some kind of negative effect on competition for the NCLAT to find the company guilty of abuse of its dominant position. Abuse of dominant position can be ascertained only when the Play Store puts other applications in a “compromising position” by imposing an unnecessary charge, Salve said.
“If any application other than the Play Store is allowed as a payments app, then Google will have to chase that developer to get the service fee or commission that the developer has collected on Google’s behalf,” Salve said.
By way of an observation, the appellate tribunal said that if Google combines the payment system with placing an app on the Play Store, it’s placing a restriction on other aggregators. “There might be other players in the market who charge a lesser service fee/commission than the Play Store. If you’re using such a restrictive practice, then it itself translates into an abuse of dominant position,” the bench said.
The NCLAT will hear the matter next on April 17.