According to Additional Solicitor General N Venkataraman, the Google 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 laws 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 tech giant 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.
Q. What are your thoughts on the NCLAT’s decision upholding CCI’s penalty against Google? Is it furthering the cause of competition law?
Ans: The NCLAT’s decision against Google is a watershed moment in the history of abuse of dominance. The tribunal has previously made 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.
Even though it was enacted in 2009, India’s Competition Act is a new law. Progressive decisions have only recently been made. CCI is a forum that investigates and adjudicates on allegations of violations of the Competition Act of 2002. This law addresses anti-competitive practises in three ways: abuse of dominance, abuse through combinations, and an appreciable adverse effect on competition. These ingredients crystallise and pass through the scrutiny and filtering of tribunals and courts.
Q. What are the most important CCI findings that you believe were upheld by NCLAT?
Google had three types of agreements: the Anti-Fragmentation Agreement (AFA), the Mobile Application Distribution Agreement (MADA), and the Revenue Sharing Agreement (RSA). These agreements impose numerous restrictions on Original Equipment Manufacturers (OEMs) and app developers. Because of their dominance, they were able to extract these from OEMs and app developers. For example, if you want to sign the MADA, you should 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 default placement of Google’s apps; this is linked to RSA, which pays a revenue share for doing so. All of this was discovered 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 major victory.
As you can see, the entire business structure was designed in such a way that you have an operating system and an app. As a result, both produce data and traffic from the consumer. They are eventually funnelled and exit the world of use via Google search. So, no matter what browser you use, everything is eventually linked to Google search. Because it eventually gathered data and received traffic, the company used Google search to generate revenue. Google Search controls more than 98 percent of the market, while YouTube controls 99.9 percent of the streaming space. As a result, monetization became extremely 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, proving 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 reliefs. For example, NCLAT discovered that Google does not need to provide for app uninstallation. However, the tribunal ruled that pre-installing Google apps is an anti-competitive practise. What difference does it make for uninstallation? It is unimportant. 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) and can be monetized. As a result, Google is now obligated to enter into a fair and reasonable contract with companies that want to use their API. The tribunal found that there is no specific finding of being anti-competitive, so they are not confirming this direction. We ourselves stated that reasonable notice is sufficient for sideloading.
Q. How will the NCLAT’s decision benefit Indian app developers?
Today, 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, and 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 startup growth vision.
Q. How did you find arguing the case against Google in NCLAT for over 15 hours?
This could not have been accomplished by a single person; it required a complete team effort. The CCI worked with us as a cohesive unit. I am grateful to my briefing counsel, Mr. Samar Bansal and Manu Chaturvedi. We worked for 25 days, three hours a day, every evening from 7:30 to 10:30 p.m. As a result, success should be shared equally among all team members. As a result, it was a fascinating experience. Even on Google’s side, the lawyers were gracious enough to admit before the tribunal that they had a large bandwidth supporting them from India and possibly outside of India as well (we do not know). The battle was well fought until the end, with both sides trying to make a good case. As a result, both intellectually and as a lawyer, it was a very stimulating and inspiring experience. What is amazing is that the judges listened patiently day after day, gathering and assimilating all of these inputs. They could write a very detailed judgement with global implications 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 case.
Q. What are your thoughts on the recently passed Competition Amendment Bill in Parliament?
Two critical amendments have been introduced. The first is settlement, which was introduced with the explicit goal of accelerating market course correction. This amendment also gives violators of the Competition Act the option to immediately fall in line 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 and fail. See, when it came to imposing penalties, Google was not very cooperative. As a result, we will now follow the practise of certain international jurisdictions in calculating the penalty for violating the Competition Act based on the enterprise’s global turnover. These critical amendments will solve problems. 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 up with recent technological advances?
Digital competition law is being developed as a supportive supplementary law to the Competition Act. Digital laws are becoming increasingly nuanced around the world, so digital competition law must be laser-focused. So something in this direction is in the works. We hope that it will emerge and supplement existing competition law in a very dynamic manner.
Q. You have represented the country in numerous forums across the country; how do you view this opportunity?
It’s a rare opportunity, to say the least. We consider India to be Bharat Mata; she is divine to us, and thus serving her is not a privilege that everyone is granted. So, whoever is granted this privilege should use it responsibly; there is a great deal of responsibility attached to it. This journey has been extremely rewarding; serving your mother brings you great joy. There is so much to do, so many opportunities, and this government has been extremely supportive. They have given us a lot of autonomy because they believe in our abilities. So I should be extremely grateful to the government for providing me with this opportunity.
