Google's third-party billing system ‘violates CCI’s order’; exploring all avenues to challenge it: ADIF

Google's policy change was in response to the recent antitrust directives from the Competition Commission of India.

Alliance of Digital India Foundation (ADIF), a New Delhi think tank comprising prominent Indian internet companies such as Matrimony, Paytm, MapmyIndia, TrulyMadly and other local entrepreneurs, said on March 1 that it is exploring “all avenues” to challenge Google's third-party billing system for app developers in India, terming it a “violation of the CCI order and Competition Act”.

On February 22, Moneycontrol had reported that Google is updating the payments policy of Google Play to allow app developers to offer an alternative billing system to consumers within India for in-app purchases, along with its own payment system, from April 26.

As per the new policy, if a user pays through the alternative billing system (also termed as 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 shell out 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.

"Google Play’s service fee has never been simply a fee for payment processing. It reflects the value provided by Android and Google Play, and all of the developer services we offer, including app distribution and discovery, the commerce platform, developer tools, analytics, training, and more,” a Google spokesperson said at the time.

On March 1, ADIF said representatives from the matrimony, dating, fintech, edtech and gaming sectors discussed the implications of Google’s User Choice Billing system along with various aspects of the company's recent announcement.

Indian companies, including matrimonial portals Matrimony, Shaadi, fintech major Paytm, and dating service TrulyMadly, were also part of the discussion.

“Despite not using any service from Google, app developers will be forced to pay commissions to Google. The startup community agreed that Google's non-compliance will impact the Indian startup ecosystem negatively,” the think tank said.

Google’s policy change was in response to the recent antitrust directives from the Competition Commission of India (CCI). On January 26, Google had announced sweeping changes it will be making to its Android and Play business to comply with these directives, even as the tech giant continues to challenge the antitrust 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.

Through a separate order the same month, CCI had directed the Android maker to modify its conduct towards smartphone makers through a range of corrective measures besides imposing a penalty of Rs 1,338 crore for exploiting its dominant position in Android.

Google moved the NCLAT in January, but failed to get immediate relief. The company then approached the Supreme Court against the tribunal's decision. While the apex judicial body refused to intervene in the case, it asked the NCLAT to make a decision by March 31.

In February, Fortnite maker Epic Games also challenged Google in the NCLAT for not complying with a few portions of the CCI order. In its petition, Epic Games had alleged that Google is not permitting the gaming firm’s app store on its app marketplace Google Play. The tribunal is currently hearing arguments on the matter.

India is among the biggest markets for Google Play in terms of app downloads and users. The country is also emerging as a key monetisation opportunity for Google Play, driven by the rising adoption of digital transactions in the country.