Alphabet Inc., owned Google and the Competition Commission of India (CCI) are at loggerheads once again1. This time over the alleged circumvention of the CCI's earlier order, dated October 22, 2022, wherein the anti-trust watchdog reprimanded Google for its anti-competitive billing system on the Google Play Store and imposed a hefty monetary penalty of Rs. 934 crores on the technology giant.
On May 12, 20232, in a non-public order, CCI ordered an investigation into the implementation of its October 2022 order on a complaint filed by the Match Group along with the Alliance of Digital India Foundation (AIDF). The complainants have alleged that under Google's new billing system, an additional service fee ranging from 11% to 26% is still being levied on third-party payment processors despite CCI order to the contrary.
The latest complaint against Google stems from the CCI's order, dated October 22, 20223, wherein a penalty of Rs. 936.44 crore on Google was levied for abusing its dominant position in the market with regard to its Play Store policies. The CCI also issued a cease-and-desist order and directed Google to modify its conduct within a specified timeline. The CCI found Google to be dominant in the markets for licensable operating systems (OS) for smart mobile devices and app stores for Android OS in India.
The Play Store, owned by Google, serves as the main distribution channel for app developers in the Android mobile ecosystem, allowing Google to benefit from the apps brought to market. Google's Play Store policies required app developers to exclusively use Google Play's Billing System (GPBS) for receiving payments for apps and certain in-app purchases. If developers did not comply, their apps were not permitted on the Play Store, resulting in a loss of potential customers. The CCI deemed this practice one-sided, arbitrary, and lacking legitimate business interest, as it prevents app developers from choosing alternative payment processors from the open market, thereby in violation of section 44 of the Competition Act, 2002. The CCI also examined allegations of Google excluding rival UPI (Unified Payments Interface) apps as effective payment options on the Play Store. It was found that Google Pay, owned by Google, had superior integration capabilities compared to other UPI apps, giving it advantages in terms of user-friendliness and success rates. However, Google informed the CCI that it had recently changed its policy and allowed rival UPI apps to be integrated with its platform.
Based on its assessment, the CCI concluded that Google's practices violated various provisions of the Competition Act, of 2002. These violations included:
- The imposition of unfair conditions on app developers;
- Discriminatory practices such as disturbance of innovation incentives, denial of market access for payment aggregators and app developers; and
- Leveraging dominance in the mobile OS and app store markets to protect its position.
As a result, the CCI directed Google to cease and desist from engaging in anti-competitive practices and imposed several measures to address the issues. These measures include:
- Allowing app developers to use third-party payment processing services;
- Removing anti-steering provisions;
- Ensuring transparency in data collection and sharing; and
- Not discriminating against other UPI apps.
Google's Response
Google, in its recent blog post5, responded to the CCI order by asserting that its Google Play's payments policy is in line with the CCI's requirements, and the company intends to implement the policy in India. Google highlighted that it has expanded user choice billing to all developers in India and the said update came into force on April 26, 2023.
Google further underlined the fact that developers in India now have the following three billing options available with them:
- They can integrate Google Play's billing system, which enables seamless transactions with millions of customers globally, providing users with secure payment methods and centralized payment management.
- Developers can offer an alternative billing system alongside Google Play's for users in India. This option is also available for app developers expanding into international markets through Google's user choice billing pilot, currently active in 35 markets.
- Developers can choose a consumption-only model without paying a service fee, even if their app includes paid content. This option allows users to log in and access content they have already paid for elsewhere.
According to Google, most developers worldwide have already selected one of these paths. For developers in India, who have not yet implemented one of these options, Google is now informing such developers to opt for one of these paths, following the deadline i.e. April 26, 2023.
Conclusion
The alleged non-compliance and imposition of unfair and disproportionate conditions by Google on third party payment providers, if true, would be a textbook case of a monopoly flexing its dominance over the regulator. Google had previously argued that the service fee allows Google to make requisite investments for the development of Play Store and the Android operating system as a whole, but this plea was rejected by the watchdog in its order.
As per media reports, the CCI has asked Google to file its official response within 4 weeks6. Therefore, it begs to be seen how Google would justify, what appears to be, abuse of its market position and dominance once again in front of the CCI.
Footnotes
1. https://ssrana.in/articles/cci-fines-google-abuse-dominant-position/
3. XYZ (Confidential) Vs. Alphabet Inc. and Others, (14 of 2021) Match Group, Inc. vs. Alphabet Inc. and Others, (35 of 2021) Case no. 07 of 2020 with 14 of 2021 with 35 of 2021
4. https://indiankanoon.org/doc/1780194/
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