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ADIF moves CCI seeking interim relief from Google Play Store commission

Google Play Store commission of 30 percent in India will come into effect on March 31, 2022. Moneycontrol has learnt that the petition was filed in the CCI last week.

October 11, 2021 / 12:24 PM IST
Search engine giant Google is celebrating its 23rd birthday on September 27. To mark the special day, Google unveiled a special birthday doodle on its homepage.The tech company said that

Search engine giant Google is celebrating its 23rd birthday on September 27. To mark the special day, Google unveiled a special birthday doodle on its homepage.The tech company said that "one chance encounter" between two computer scientists changed the course of the Internet and the lives of millions.

The Alliance of Digital India Foundation (ADIF), a New Delhi think tank consisting of entrepreneurs and startups, has moved the Competition Commission of India (CCI) to seek interim relief against the implementation of Google Play Store commission till the investigation into the tech giant’s abuse of dominance is complete.

Google Play Store commission of 30 percent in India will come into effect on March 31, 2022. The ADIF confirmed the development to Moneycontrol and said that the petition was filed in the CCI last week.

An email has been sent to Google on the same and the story will be updated based on the response.

CCI petition

According to ADIF, this relief has been sought by on behalf of App developers as Google’s new policy will restrict certain categories of apps to use only Google Billing System (GBS) for accepting payments.

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"This would be an issue for app developers because GBS charges 30% percent commission for all transactions on the Google Play Store, compared to 2% charged by other payment processing systems. There is a strong case for seeking such relief as this new policy, when it goes into effect next March, would have a destructive effect on the operating margins of a large number of startups and make their business models infeasible," ADIF said in a statement.

The CCI had in November 2020 directed a probe into the issue of mandatory use of Google Play Store’s payment system for paid apps & in-app purchases. The commission is of the prima facie view that such a policy is unfair as it restricts the ability of app developers to select a payment processing system of their choice.

"Google’s new policy will exclude competing payment service providers from the market for payments for digital goods consumed through Android devices," the statement said. 

According to Sijo Kuruvilla George, Executive Director, ADIF if the status quo is not maintained pending the completion of the inquiry, Google will enforce its terms on the Play Store in March 2022, leading to irreversible consequences for India’s startup ecosystem.

CCI investigation into abuse to dominance

This development comes shortly after the Times of India reported that CCI's investigation arm found in its investigation that Google abused the dominant position of its Android operating system in the country to illegally hurt competitors. CCI had ordered a probe into Google's alleged abuse of Android in India in 2019. Android powers 98 percent of the smartphones in the country, as per market research firm Counterpoint. The tech giant said it has not yet received or reviewed this report.

Following this, Google had taken CCI to court over the "leak" of a confidential interim report related to an ongoing investigation into the company's Android smartphone agreements on September 23. The case was dismissed a few days later, with CCI agreeing to the company's requests to keep information confidential during the course of the investigation.

While Google has always charged a 30 percent commission for apps selling digital goods on their app stores, the firm said in October last year that it will more proactively enforce this commission starting September 30, 2021. It had noted that the change is expected to impact less than 3% of apps on Play Store that are currently not using the company's billing system

However, following a massive push back from the Indian developer community, the tech giant delayed the implementation to March 2022. It also reduced the commission rate to 15 percent for the first $1 million revenue developers earn using the Play billing system every year in March 2021.

Play store commissions

Google and Apple also do not allow other payment options for in-app purchases “Clearly they were overstepping the boundaries with the 30 percent commission, which not a lot of people were happy about and to be fair, the commission was out of whack,” Amit Ranjan, CoFounder, SlideShare and Architect, DigiLocker Project said.

Apart from India, Google and Apple are facing scrutiny over business practices related to their respective app marketplaces in several countries including the United States.

In September, South Korea's parliament had approved a bill that bans app store operators like Google and Apple from forcing app developers to use their own billing systems for in-app purchases.

ADIF has also planned to meet the MeitY officials to discuss possible policy intervention such as legislation to address the abuse of dominance by the big tech companies like Google and Apple.

Abuse of dominance in India

In 2018, Google was fined Rs 136 crore by the Competition Commission of India (CCI) against abuse of dominance for online general web search.

In June 2021, CCI also opened a probe over Google's alleged abuse of dominance in the Android TV operating system.
Swathi Moorthy
Vikas SN

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