Madras HC dismisses pleas of Indian startups against Google's app billing policy

Google had earlier announced that it will allow app developers to offer an alternate billing system for in-app purchases within India from April 26, 2023

The Madras High Court has dismissed 14 of the 16 pleas from Indian startups and tech companies, including Bharat Matrimony, Shaadi.com and Unacademy, against Google's app billing policy, according to a court order seen by Moneycontrol.

The court gave the order stating that the issue falls under the jurisdiction of the Competition Commission of India (CCI). The two remaining pleas, one from streaming service Disney+ Hotstar and exam preparation app Testbook, are also likely to be dismissed, Moneycontrol has learnt.

According to the High Court, since the startups alleging abuse of dominant position by Google, the CCI has jurisdiction to adjudicate on the same. The high court held that CCI is empowered to direct any enterprise guilty of abuse of dominant position to discontinue such practices, hence  any order passed by CCI under such circumstances would be applicable to all the businesses. However, in case of the present proceedings, such an order will be made applicable only to the company which has challenged Google's policy.

The court however rejected Google's contention that the cases should be filed in California. The court noted that "Competition Act enacted by Indian
legislature with the sole aim of preventing practices having adverse effect on competition will be of no use (if such a request is entertained). The preamble to Competition Act reads that it is an Act to ensure freedom of trade carried on by participants in Indian market. Freedom of trade is a fundamental right available to Indian Citizens under Article 19 of the Constitution of India."

The Madras HC passed the order after Google file an application under Order 7 Rule 11 of the Civil Procedure Code (CPC), 1908 contending that the suits filed by the startups were not maintainable. According to Google, the suits should have been filed in California as the company is headquartered there. Google also contended that a civil court cannot adjudicate upon these issues as it involves allegations of anti-trust violations.

Among other petitioners include startups such as KukuFM, TrulyMadly, QuackQuack, Pratilipi, Crafto, Tamil publisher Ananda Vikatan, streaming services like Altt, Stage and Aha and industry body Indian Digital Media Industry Foundation that represents prominent streaming services such as Zee5, SonyLIV and SunNXT.

The court had earlier provided an interim injunction to these companies, asking them to to pay a lower 4 percent fee to Google for using its in- app payments system. It also directed the tech giant not to delist any of them from the Play Store.

This was after petitioners had approached the state high court challenging Google's notice to either adopt its new app billing policy or face delisting from the app marketplace in recent months. Google had stated in May 2023 that it will start enforcing Play billing policy in India.

In February, Google had said that it will allow app developers to offer an alternate billing system for in-app purchases within India from April 26, 2023. This was announced in a bid to comply with CCI directives that had directed the tech major not to restrict app developers from using a third-party billing system among other things last year.

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.

In April 2023, Alliance of Digital India Foundation (ADIF), a New Delhi policy think tank comprising prominent Indian internet companies such as Matrimony, Paytm, MapmyIndia, TrulyMadly and other local entrepreneurs, had termed it as an "abusive dominance practice" by the company and had requested the antitrust watchdog to look into Google's user choice billing system 'on an urgent basis'.

In May, Google however had claimed that its updated payment policy is compliant with CCI's order.

CCI stated on May 12 that it needed to inquire whether the policy complies with the antitrust watchdog's earlier directives. The case is yet to come up for hearing.