NCLAT reduces CCI's fine on Google in Play Store case by 75% to ₹217 crore

The penalty was originally imposed on Google’s parent company, Alphabet Inc., for allegedly abusing its dominant position in mobile app markets through the Android Play Store—by forcing developers to use its own billing method and charging a mandatory service fee even when third-party billing methods were used.

On Friday, NCLAT directed Google to deposit the revised amount within 30 days, noting that the company had already paid 10% of the total penalty.

The ruling, delivered by an NCLAT bench led by chairperson Justice Ashok Bhushan, partially accepted Google's appeal by setting aside some portions of CCI's 2022 order. However, the tribunal upheld key aspects of the CCI’s findings, ruling that Google had leveraged its control over the Android and Play Store ecosystems to promote its own services, such as Google Pay and YouTube, while restricting competition.

Unfair conditions on app developers

NCLAT also reaffirmed that Google imposed unfair conditions on app developers by mandating the use of its Google Play Billing System (GPBS) for paid apps and in-app purchases, preventing them from using cheaper alternatives. However, the tribunal overturned some of CCI’s findings, stating that Google did not deny market access to payment processors, as less than 1% of Play Store transactions occurred through GPBS, keeping the broader digital payments market open.

The appellate tribunal also dismissed CCI’s claim that Google engaged in unfair pricing by charging higher commissions to some developers while exempting YouTube, stating that there was “no conclusive evidence" of favouritism.

Additionally, it rejected arguments that Google’s policies hindered technological development, finding no proof that they slowed innovation or harmed consumers.

As Google was not found violating several anti-competitive provisions, the penalty was reduced by 75%, with NCLAT imposing a 7% penalty based on the relevant turnover.

The move comes as a major win for Google in the battle for favourable technology policies in India. The reduction of penalty in response to CCI’s second fine on Google from three years ago comes amid the backdrop of a pullback on a 6% equalization levy that the Indian government charged offshore online advertisers—a policy move that Google had for long been lobbying for.

Legal and policy experts largely viewed the move as a setback for smaller companies challenging large, dominant technology firms in India.

“The revised penalty mandated by NCLAT is barely a rap on the knuckle for Google. One key observation by the Tribunal is that charging different commission rates on third party app providers and YouTube—its own platform—does not amount to discrimination is surprising and enables self preferencing by these dominant ecosystems," said Isha Suri, research lead for competition law at policy think-tank, Centre for Internet and Society (CIS).

A senior lawyer specializing in competition law, who requested anonymity since she represents Big Tech firms across various courts in India, added that NCLAT’s verdict was “not surprising"—but also said that the move “could lend vital precedent in favour of Google in future CCI investigations and pending appeals at the Supreme Court as well."

“The verdict is extremely balanced, and underlines that being big is not bad," said Sajan Poovayya, senior advocate, Supreme Court—who led Google’s appeal against the CCI at NCLAT. For massive penalties, the large entity must have committed a particular conduct, and that conduct must have the propensity to adversely impact competition. This impact assessment must be undertaken irrespective of how small or large an entity is. The second point here is that just because a company is globally big, the regulator cannot impose a ₹1,000-crore penalty. "The financial size of the company’s operations in India must be considered and penalties, if any, imposed accordingly. NCLAT has done a phenomenal job in how competition jurisprudence must evolve in India, and I hope that this case lends precedent to future competition case consideration in India."

Monetary penalties ineffective vs Big Tech

CIS’ Suri added that a larger issue is with the nature of the verdict, which underlined the ineffectiveness of monetary penalties on Big Tech—a group of technology companies that rank among the world’s most valuable and powerful.

“Small penalties on Big Tech do not move the needle in terms of enforcing them to adhere to fair market norms. We’ve seen in Meta’s case, where even after being penalized at up to 10% of its global revenue, the quantum was not a major setback—and investors simply wrote the penalty off as an operating expense and therefore there is a need to put structural remedies on the agenda. A more important aspect is for India to find an adequate mechanism that holds Big Tech to account—small penalties will not help any smaller entity seek fair market recourse against the might of the likes of Google," Suri said.

In the verdict, Google reported turnovers of ₹3,096 crore in FY22, ₹5,058 crore in FY21, ₹2,691 crore in FY20 and ₹1,538 crore in FY19. The company had argued that penalties, if any, should in this case be levied only on its revenue from its Play Store operations. The latter, as reported by Google to NCLAT, were ₹1,168 crore in FY21, ₹533 crore in FY20 and ₹259 crore in FY19.

NCLAT turned down Google’s appeal in this regard, and upheld the penalty on its overall revenue.

The decision brings significant relief to Google, which dominates the Indian smartphone market with its Android operating system. Public data pegs Android to hold nearly 95% of India’s $40-billion smartphone market—vastly ahead of its nearest competitor, Apple’s iOS (4%). Both Google and Apple charge commissions of 15% or 30% on their respective app marketplaces.

CCI’s investigation into Google

In September 2022, Google expanded its User Choice Billing (UCB) pilot program to include India, allowing developers to offer alternative payment systems alongside Google Play's billing system for in-app purchases.

In its October 2022 ruling, CCI found that the Play Store, the primary app distribution platform for Android devices, gave Google an unfair advantage by enforcing the use of its own billing instruments for paid apps and in-app purchases. Developers were also barred from informing users about alternative payment methods, a restriction CCI deemed unfair, restrictive, and discriminatory.

CCI also flagged Google’s preferential treatment of YouTube, which was exempt from GPBS service fees, unlike other apps. Additionally, it criticized Google Pay’s privileged integration into Play Store payments via the superior "intent flow" technology, while rival UPI apps were limited to the less efficient "collect flow," leading to market access restrictions.

The regulator ordered Google to stop these anti-competitive practices and implement changes such as allowing third-party billing systems, removing anti-steering provisions, and ensuring equal treatment of all UPI apps.

CCI also noted that the test for abuse of dominance was not whether a competitor went out of business but whether Google’s policies eroded competition and prevented fair market access. Although Google introduced an alternative billing system after the CCI ruling, the service fee remained high.

Google’s defence

Google challenged the CCI order in January 2023, arguing before NCLAT that the penalty was excessive and that the ruling lacked sufficient evidence. The company claimed CCI had wrongly defined the relevant market by excluding digital payment alternatives such as credit and debit cards.

Google also stated that GPBS merely collected service fees and did not prevent other payment processors from operating in India. It argued that CCI failed to demonstrate actual harm to competition and that Google was merely following National Payments Corporation of India (NPCI) regulations for its integration with UPI.

This was the second major penalty CCI imposed on Google in 2022. In an earlier case related to Android dominance, the company was fined ₹1,337.76 crore, bringing the total penalty to over ₹2,200 crore across two rulings in October 2022. While Google paid the Android-related fine in full, it chose to challenge the Play Store penalty.