Google is gearing up for the second leg of its legal battle against the Competition Commission of India (CCI) on April 17 at the National Company Law Appellate Tribunal (NCLAT).
The tech giant will be appealing against the CCI's order imposing a penalty of Rs 936.44 crore for its alleged abuse of its dominant position with regard to its Play Store policies.
Moneycontrol explains how this order came to be passed by the CCI, what CCI asked Google to do, and how the tech giant has implemented the order.
What is the CCI’s order?
The CCI on October 25 2022, penalised the tech giant for restricting app developers from using any third-party billing or payment processing services to purchase apps for in-app billing on Google Play Store. Google Play Store is a digital distribution service operated and developed by Google, from where mobile apps are downloaded.
What led to the CCI investigation into Google’s policies?
In 2020, based on information filed before the CCI, the antitrust watchdog took a prima facie view that Google violated provisions of the Competition Act, 2002, by imposing Google’s Payment Policy. According to Google’s policy, developers charging money for apps and downloads from Google Play Store must use Google Play’s payment system. The CCI also directed the Director General (DG) to investigate the allegations.
The investigation found that Google’s Play Store policies require app developers to exclusively and mandatorily use Google Play's Billing System (GPBS) not only for receiving payments for apps but also for certain in-app purchases, which are purchases made by users of apps after they have downloaded/ purchased the App from the Play Store. Further, app developers cannot, within an app, provide users with a direct link to a webpage containing an alternative payment method or use language that encourages a user to purchase a digital item outside of the app.
What did the DG’s investigations find?
The DG’s investigation found that the tech giant was not using its billing system for its own apps such as YouTube, which amounts to "imposition of discriminatory conditions as well as pricing" because its own apps were not paying the app commission that is imposed on other apps.
Furthermore, If the app developers do not comply with Google’s policy of using GPBS, they were not permitted to list their apps on the Play Store, as a result of which they would lose out the vast pool of potential customers from Android. The investigation revealed that the app developers are left bereft of the inherent choice to use payment processors of their liking from the open market.
What was the CCI’s ground for penalising Google?
The CCI held that making access to the Play Store, for app developers, dependent on mandatory usage of GPBS for paid apps and in-app purchases constitutes an imposition of an unfair condition on app developers. The CCI held that Google was following discriminatory practices by not using GPBS for its own application – YouTube.
The anti-trust regulator further said that mandatory imposition of GPBS disturbs innovation incentives and the ability of both the payment processors as well as app developers. It was held that imposing GPBS also results in the denial of market access for payment aggregators as well as app developers. Finally, the CCI concluded that the practices followed by Google resulted in leveraging its dominance in the market for licensable mobile OS and app stores for Android OS, to protect its position.
The anti-trust watchdog directed Google to allow third-party billing/ payment processing services, either for in-app purchases or for purchasing apps. Google was directed not to discriminate against apps using third-party billing/payment processing services in any manner. The CCI imposed a penalty of Rs 936.44 crore on Google and asked it to cease and desist from its anti-competitive practices with respect to Play Store.
How is Google contesting the order?
Google has appealed against this order before the NCLAT. On January 11, the tribunal refused to grant immediate relief to Google against CCI’s order and posted the case for the final hearing in April 2023. While Google filed an appeal at the Supreme Court against the NCLAT’s order, the tech giant did not get the case listed for hearing.
Has Google complied with the CCI’s order?
In February, Google’s update on its support page stated that it will allow app developers to offer an alternate billing system for in-app purchases within India from April 26, 2023. As part of this move, developers will be allowed to offer an additional billing system to users along with GPBS when purchasing in-app digital content. If a user pays through the alternative billing system, the transaction will still be subjected to a service fee but at a 4 percent rate reduction.
What do app developers say?
Some local and international companies have alleged that Google is not fully complying with CCI's order and that the measures it has announced are not enough.
Rohan Verma, CEO of digital mapping firm MapmyIndia, had earlier said these measures are "piecemeal, and being done in the way Google wants". He had said that the outcome of these steps will not lead to an "on-ground impact of enhancing competition".
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