According to Additional Solicitor General N Venkataraman, Google’s decision will have a direct impact on Make in India

According to N. Venkataraman, businesses should be prepared to pay penalties based on their global revenue for violations of competition law following a law amendment.

The National Company Law Tribunal’s decision to uphold the Competition Commission of India’s Rs. 1,338 crore penalty against Google will allow Indian start-ups and app developers to innovate more. In an exclusive interview with Moneycontrol, Additional Solicitor General N Venkatraman, who argued the case for the fair trade watchdog, said.

Q: What are your thoughts on the NCLAT’s decision upholding CCI’s penalty against Google? Is it advancing the cause of competition law?

Ans: The NCLAT ruling against Google is a watershed moment in the history of abuse of dominance. The tribunal has previously rendered decisions on abuse of dominance, but this is a well-fought case by both sides, with a lot of data on how to show abuse of dominance.

Despite the fact that it was enacted in 2009, India’s Competition Act is a new law. Only recently have progressive decisions been made. CCI is a forum that investigates and rules on allegations of violations of the 2002 Competition Act. This law addresses anti-competitive practises in three ways: abuse of dominance, abuse through combinations, and a significant adverse effect on competition. These ingredients crystallise and are scrutinised and filtered by tribunals and courts.

Q. What are the key CCI findings that you believe were upheld by NCLAT?

Google had three types of agreements: Anti-Fragmentation Agreements (AFAs), Mobile Application Distribution Agreements (MADAs), and Revenue Sharing Agreements (RSAs) (RSA). These agreements impose numerous constraints on Original Equipment Manufacturers (OEMs) and app developers. Because of their dominance, they could extract these from OEMs and app developers. For example, if you want to sign the MADA, you must first assign the AFA, which commits an OEM to not developing an Android Fork (an operating system that is a modified, competing version of the Android OS based on the Android source code). Similarly, if they sign MADA, OEMs must agree to Google’s apps being placed by default; this is linked to RSA, which provides a revenue share for doing so. All of this was found to be an abuse of dominance and anti-competitive. When the tribunal rules that Google’s entire domain of abuse of dominance, as determined by the CCI, is correct, it is a significant victory.

As you can see, the entire business structure was designed in such a way that you now have an operating system and an app. As a result, both generate data and traffic from the consumer. They are all eventually funnelled and exit the world of use via Google search. So, regardless of which browser you use, everything is eventually linked to Google search. Because it eventually gathered data and received traffic, the company used Google search as a revenue generator. Google Search controls over 98 percent of the market, while YouTube controls 99.9 percent of the streaming space. As a result, monetization became very simple for them. The tribunal found that there were no new entrants in the market, and on the contrary, existing, even branded players (were) exiting the market, demonstrating abuse of dominance.

Q: Do you believe Google’s four NCLAT reliefs will have an impact on CCI’s larger order?

I’ve said it before, and I’ll say it again: the NCLAT upheld 98 percent of CCI’s order. Google has received only minor concessions. For example, NCLAT discovered that Google does not need to provide uninstallation of its apps. The tribunal, however, ruled that pre-installing Google apps is an anti-competitive practise. What difference does it make in terms of uninstallation? It makes no difference. Similarly, the tribunal ruled that Google does not have to share its Application Programming Interface (API) for free because it is their IP (Intellectual Property), which they can monetize. As a result, Google is now obligated to enter into fair and reasonable contracts with companies that wish to use their API. The tribunal found that there is no specific finding of being anti-competitive, so they are not confirming the direction that Google must not permit third-party app stores through Play Store. We ourselves stated that reasonable warning is sufficient for sideloading.

Q. How will the NCLAT’s decision help Indian app developers?

First and foremost, following NCLAT’s order, the doors are open for innovation, and you can enter the market on a free and reasonable basis. Google’s total eclipse over all OEMs and app developers has ended; they are now free to do whatever they want. All of this will re-energize the entire market, in terms of phone production, app prioritisation, and app development. It will have a direct impact on the government’s Make in India and start-up growth vision.

Q. How did you find arguing the case against Google in NCLAT for more than 15 hours?

This could not have been accomplished by a single person; it required a collaborative effort. The CCI collaborated with us as a cohesive unit. I should express my gratitude to my briefing counsel, Mr. Samar Bansal and Manu Chaturvedi. We worked for 25 days, three hours a day, from 7:30 to 10:30 p.m. every evening. As a result, success should be shared equally by all team members. As a result, it was a very interesting experience. Even on Google’s side, the lawyers were gracious enough to admit in front of the tribunal that they had a large bandwidth supporting them from India and possibly beyond (we do not know). The battle was well fought until the end, with both sides attempting to make a good case. As a result, it was a very stimulating and inspiring intellectual and legal experience. What’s amazing is that the judges listened patiently day after day, gathering and assimilating all of these inputs. They could write a very detailed judgement that will have an impact on global competition law in just a week. This will be one of the few cherished moments in the professional lives of any lawyer who was involved in this matter.

Q: What are your thoughts on the recently passed Competition Amendment Bill in Parliament?

Two significant amendments have been introduced. The first is settlement, which was introduced with the explicit goal of bringing market course correction as soon as possible. This amendment also gives violators of the Competition Act the option to immediately comply and regulate themselves, avoiding endless litigation.

Second, we have now decided to impose penalties on global turnover for companies that continue to fight the litigation but fail. See, when it came to imposing penalties, this Google experience was not very happy because they never cooperated. As a result, we will now follow the practise of certain international jurisdictions in calculating the penalty for acts in violation of the Competition Act based on the enterprise’s global turnover. These critical changes will resolve issues. The message from the amendment is clear: either settle it or pay the penalty on your global turnover if you fight it out and lose the litigation.

Q: Do you believe CCI has kept pace with recent technological advances?

A digital competition law is being developed as a supportive supplementary law to the Competition Act. Because digital laws are becoming increasingly nuanced around the world, digital competition law must be laser-focused. So something is in the works in this direction. We anticipate that it will emerge and supplement existing competition law in a highly dynamic manner.

Q. You have represented the country in numerous forums throughout the country; how do you view this opportunity?

It’s a rare opportunity, to put it mildly. We consider India to be Bharat Mata; she is divine to us, and thus serving her is not a privilege that everyone is afforded. So, whoever is given this privilege should use it responsibly; there is a lot of responsibility attached to it. This journey has been extremely rewarding, and serving your mother brings you great joy. There is so much to do, so many opportunities, and this administration has been extremely supportive. They have given us a lot of freedom because they believe in our abilities. So I should be grateful to the government as well for providing me with this opportunity.