CCI to probe Google's billing system for violation of competition law

CCI orders investigation into Google's new billing policy

The Competition Commission of India (CCI) has passed an order noting that tech giant Google's Users Choice Billing system (UCB) to be 'prima facie' violative of the Competition Act, 2002.

Pursuant to this finding, the CCI on March 15 ordered the Director General (DG) to conduct an investigation, complete it and file a report regarding the same in 60 days.

"The Commission is of the prima facie view that Google has violated the provisions of Section 4(2)(a), 4(2)(b) and 4(2)(c) of the Act, as elaborated supra which warrants detailed investigation," the order, reviewed by Moneycontrol, noted.

Noting that the Google has imposed unfair price in violation on app developers, the order said "It appears that such imposition results in app
developers having fewer resources to enhance or develop their app offerings, thereby constraining the growth of the app market."

According to the order "Additionally, Google's imposition of unfair service
fee on app developers could force them out of the market or deter them from entering due to increased operational costs, thus denying market access to these developers."

The antitrust regulated has furthermore observed that Google's behavior curtails the freedom of app developers to select their business
model and user engagement method.

The order was passed in a plea filed by a bunch of startups alleging that Google had violated CCI's earlier order asking the company not to restrict app developers from using third-party billing or payment processing services to purchase apps or for in-app billing on Google Play.

Google and some Indian companies have been warring recently over the former removing certain apps from its online mart Play Store  over disputes regarding its billing system. However, these apps were reinstated by Google 'temporarily' on March 5.

The dispute between Google and a bunch of Indian compan is not a new one, having begun almost six years ago when a complaint was filed before the Competition Commission of India (CCI) over the tech giant abusing its dominant position in the Android and the Play Store ecosystem.

In February 2024, the Supreme Court agreed to hear pleas by a bunch of startups challenging tech giant Google's billing policy. The court however, refused to pass an interim order protecting these startups from being removed from Google's Play Store. Thus making way for Google to remove the apps of these startups if they are not in agreement with the billing policy.

These companies have alleged that under the new policy, if a user pays through the alternative billing system (also termed user choice billing system), the transaction will still be subjected to a service fee, but at a 4 percent rate reduction.

This effectively means that developers will have to pay a service fee to Google ranging from 6-26 percent for in-app purchases and subscriptions, depending on the type of app/service and the annual revenue it generates on Google Play, as compared to the regular 10-30 percent service fee.

Earlier CCI order:

In October 2022, CCI directed Google not to restrict app developers from using any third-party billing or payment processing services to purchase apps or for in-app billing on Google Play besides a range of corrective measures to modify the company's app payment policies.

It also fined Google Rs 936.44 crore for abusing its dominant position with regard to its Play Store policies.

Google is currently pursuing its appeal in NCLAT against CCI's Rs 936.44 crore fine.