Explained: Why Was Google Denied Any Relief By Supreme Court?

In a significant setback to how Google Llc does business in India, the Supreme Court has denied the tech major any relief against the competition regulator's directions.

The case has been sent back to the National Company Law Appellate Tribunal for consideration on merits.

Pronouncing the order on Thursday, the apex court said it was in agreement with the NCLAT decision of denying interim relief to Google.

"An expression of opinion by this court on the merits of the case will affect the proceedings, which are pending before the NCLAT," the top court said.

Sending the case back to the NCLAT, Chief Justice of India DY Chandrachud requested the tribunal to dispose of the appeal by March 31.

The court said that the findings of the Competition Commission of India cannot be said to be without jurisdiction or manifest error at the interlocutory stage.

"Since the appellants have been pursuing their interlocutory remedies before the NCLAT and, later, before this court, time for compliance of the order passed by the CCI is extended by a further period of a week from Thursday."

The apex court heard arguments from Google, the CCI and several interveners.

Arguing for Google, senior advocate Abhishek Singhvi said most of the offending directions put forth by the CCI had been given without any finding of abuse of dominant position.

"The impugned order is a series of non-reasons," Singhvi said.

Comparing Google's Android mobile ecosystem with Apple, he said there are 15,000 Android models, 1,500 hardware manufacturers of these smartphones, and 500 million compatible devices in India.

The entry-level smartphones are also as cheap as Rs 1,400 in the market. This is the Android revolution. The Android mobile ecosystem helps the average consumer, according to Singhvi.

Singhvi argued that pre-installed apps are given in the phone to enhance the experience of the consumer.

CJI Chandrachud remarked that when "you have this kind of market penetration, then by insisting that the manufacturers must have Google's bouquet of apps is not right".

Singhvi contended that rival applications exist side by side and it all depends on the choice of the consumer.

"If people choose Google, that is not choosing dominance; it's choosing excellence," he said. "It is not for CCI to run Google's business. If people want to choose Google, it's their choice."

At the outset, N Venkatraman, counsel for the CCI, said the directions issued by the European Commission to Google in 2018 had not been copied and pasted in its order and this specific submission by Google should be rejected outright.

On the issue of the MADA being portrayed as free, voluntary and non-exclusive, Venkatraman said while the OEMs or original equipment manufacturers are not necessarily obliged to pre-install certain apps, not installing these apps directly erodes marketability of the product. Essentially, the OEM's have no meaningful choice and, as a result, even the consumers don't have a real choice.

The margin of difference between the market penetration of rival apps and Google's pre-installed apps is huge, Venkatraman said.

This difference results in a status quo bias. If online video hosting platforms are looked at, YouTube occupies nearly 100% of the market share. Similar is the case with Gmail, with only a few minor players having a meagre 1-2% of the market share, according to Venkatraman.

"It is noted that the Google apps have attained such a status that without them, the customer would not find a smartphone attractive," he said.

On Jan. 13, when Google filed an appeal before the apex court, it said the directions of CCI strike a "blow to the ecosystem-wide efforts to accelerate digital adoption" in the country.

In Europe, they have already paid the 4-billion-euro penalty.

"In Europe, they said we will comply. But in India, it is a blow," Venkatraman said. "Competition law is that law which democratises businesses. It is anti-feudalistic in nature."

Arguing for OS Labs, which is supporting the regulator's decision, senior advocate Mukul Rohatgi said Google used Android to cement its dominant position in the market.

Google's reach and the market power of Android allows it to have control over a vast number of smartphones, Rohatgi said.

The mandatory pre-installing of certain apps reduces the incentive to download other apps he said.

In the EU, they have complied with the same things, which have taken them five years here and they still haven’t complied with it, he said.   

Counsel for MapmyIndia said they had been bundled out of the market because of what Google has done. Its market share is only 0.5% currently.