Google’s ‘partial’ NCLAT win may force App Stores to rework plans

The National Company Law Appellate Tribunal (NCLAT) in March had upheld a fine imposed on Google by the Competition Commission of India, but set aside four of the antitrust watchdog’s 10 directions to the Internet giant, including the need for it to permit hosting of third-party app stores within its Play Store.

The order has got alternative app store providers concerned as they may not be able to compete with Play Store, especially in a large market like India where the Google app store enjoys a significant presence, experts told ET.

Describing the NCLAT verdict as a “setback” and “disappointment”, legal experts and industry executives said app store providers are going to reassess how to navigate the fight against Google. Some called the verdict a “partial victory” for Google.

“It is indeed a setback for players and app developers (such as IndusOS and Epic Games) which have or intend to launch Android app stores in competition with Google’s Play Store,” said Sonam Mathur, partner at Talwar Thakore & Associates. “Such impacted players would have had the ease of distributing their app stores seamlessly” had the appellate body upheld all the CCI directions, Mathur said.

Fintech company PhonePe last year acquired IndusOS’ parent OSLabs — a mobile platform that enables content and app discovery for users and app developers.

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The homegrown app discovery platform is competing with the likes of Google Play Store and Apple Store. While the app store market has been dominated by the two US-based tech giants, Indian founders and other tech ecosystem players have been keen on building ‘Made-in-India’ play stores to combat the duopoly.Reports emerged last week that PhonePe itself was preparing to launch a dedicated app store for Android users in India, in the latest product push from the Walmart-backed firm.

Epic Games, the developer of the popular online video game ‘Fortnite’ and operator of the Epic Games Store, had approached the NCLAT in February this year alleging continued violation of CCI’s directions by Google in the Android matter.

Epic Games is also locked in a legal battle with Google in US courts over allegation of anticompetitive practices by the tech giant. In its application before the NCLAT, Epic Games sought to be included as a respondent in Google appeal’s against CCI’s order.

It is expected that parties such as IndusOS and Epic Games will intervene or try to implead themselves in the matter before the Supreme Court as well, as they did before the NCLAT, Mathur said.

Having said that, the NCLAT still upheld the CCI order and largely its findings including the penalty amount – which was in fact provisionally imposed by the CCI i.e., subject to submission of accurate financials by Google, Mathur added.

Salman Waris, founder of law firm TechLegis, said the NCLAT order is a big relief for Google as it has “taken the teeth out of the CCI decision”. The appellate body has quashed the most damaging parts of the CCI order, he said, adding that effectively four of the ten antitrust penalties that had been imposed on Google to change its business model were now repealed.

“There is going to be a pushback from Indian players and they have already started exploring various avenues, both legal and regulatory. There’s also talk of challenging the verdict,” Waris told ET.

Rohan Verma, chief executive and executive director of MapmyIndia, said there are some great alternative app stores available on Android — IndusOS now owned by PhonePe, BharOS by IIT-Madras and Mobile Sewa from the government. These offer a differentiated and good value proposition to consumers while also having strong security capabilities, he said.

While the NCLAT ruling upheld the CCI order and conclusively asserted that Google has been anti-competitive, it would be better if the courts also uphold the other CCI announced remedies such as giving a level playing field to alternative apps and app stores, he said.

“Why should a Mappls app be easily uninstallable by a user with one click, whereas Google Maps app cannot be uninstalled? Why this dichotomy? Similarly, why can’t apps in the Google Play store not be able to recommend and help users purchase all sorts of goods and services including apps? Why should the OS be selective in giving API & system access to only its own apps — then this claim by Google of Android being open is clearly an eyewash,” Verma said.

The NCLAT ruling is still being considered a win for app developers, but when it comes to app store providers, it is being viewed as a “disappointment”, those in the know told ET.

Mathur said while the startup ecosystem in India would have definitely benefited more if all the ten remedies were upheld, the CCI and the NCLAT’s orders do indeed challenge Google’s monopoly in India.