Multiple allegations were filed by People Interactive India Private Limited ("PIIPL"), Mebigo Labs Private Limited ("Mebigo"), Indian Broadcasting and Digital Foundation ("IBDF"), and Indian Digital Media Industry Foundation ("IDMIF") (collectively "Informants") against Alphabet Inc. (the holding company of various Google entities across different jurisdictions) along with Google LLC, Google India Private Limited, Google India Digital Services Private Limited, Google Asia Pacific Pte. Ltd. and Google Ireland Ltd.(here in after, collectively referred to as "Google"); before the Commission on the grounds that Google's updated payment policies (in relation to its appstore, Google Play Store) are violative of Section 4 of the Act.
In light of the order of the Commission dated October 25, 2022, Google had made certain updates to the Google Play Store's payment policies by introducing 'User Choice Billing' ("UCB"). This UCB policy provided that the app developers offering digital content can offer alternative billing system along with the Google Play Billing System ("GPBS"). As per the revised policy, transactions processed through GBPS would continue to be subject to a 15%/30% service fee/ commission, however, transactions processed through alternate billing systems would be subject to an 11% / 26% service fee/commission respectively. The Informants alleged that the updated payment polices are discriminatory and unfair, disrupting competition in the downstream app markets – by favouring Google's own applications and cementing Google's position in the payment processing market.
The Competition Commission ("Commission" or "CCI"), after undertaking due process and examinations, passed a common order dated March 15, 2024. A summary of the order is set out here under:
- The relevant markets identified by the Commission are: (a) 'market for licensable smart mobile OS in India'; and (b) 'market for app stores for Android smart mobile OS in India'.
- The Commission stated that the Google Play Store is an indispensable mechanism for reaching the users of Android devices in India, and accepting the policies and fees levied by Google was necessary for app developers to function on the play store.
- The service fees/commission being charged by Google is around 4 or 5 times of the actual cost incurred by Google to provide the relevant services to the respective application developers, and the same could be construed to be abuse by Google of its dominant position in the relevant market.
- The Commission reiterated that the app developers seem to have no choice but to agree to the terms and conditions unilaterally decided by Google, and this would suggest that the quantum of such charges is unfair given the fact that the Google Play Store is the only conduit for the aforesaid relevant markets. The Commission also stated that the revenue distribution model within the Google Play Store appears skewed in favourof Google, with app developers potentially facing substantial costs.
- The Commission took cognizance of the fact that Google has the independent right to distinguish between digital delivery applications (applications where content/services are consumed within the application) and physical delivery applications (applications which connect the consumer with the service provider in the physical world).
In view of the foregoing, the Commission is of the prima facie view that Google has violated the provisions of Sections 4(2)(a), 4(2)(b), and 4(2)(c) of the Act. Accordingly, the Commission has directed the Director General to cause an investigation under the provisions of Section 26(1) of the Act. The Director General is required to complete the investigation and submit a consolidated investigation report within a period of 60 days from the date of receipt of this order dated March 15, 2024.
Additionally, while the Commission in its order dated March 15, 2024, dealt with violations under Section 4 of the Act relating to abuse of dominance, the Commission in its order dated March 20, 2024, dealt with the interim reliefs sought by the Informants. In relation to the interim relief sought by the Informants, the Commission held that since the reliefs sought did not directly correspond with the issues currently being investigated, no interim reliefs can be granted. The Commission clarified that the integral requirement for granting interim reliefs is for the existence of a clear nexus between the relief sought and the issues under investigation or in dispute. Additionally, with respect to the interim relief sought to restrain Google from collecting any fee for transactions involving paid downloads or in-app purchases on apps offering digital products/services, the Commission clearly held that Google cannot offer the Play Store to developers without taking any consideration, especially when developers continue to charge their users for digital in-app purchases.
Originally published by 08 May, 2024
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
