COMPETITION

A SECOND STRIKE FOR GOOGLE AS CCI IMPOSES A FINE OF RS.936CR

INTRODUCTION

On October 25, the Competition Commission of India (hereinafter “CCI” or “The Commission”) fined Google LLC Rs. 936.44 crores and issued a cease-and-desist order for abusing its dominant position with respect to its Play Store regulations discussed below. It has instructed the tech giant to take a number of steps to change the company’s app payment rules within three months, and not to prohibit app developers from utilising any third-party billing or payment processing services to buy apps or for in-app paying on Google Play. This penalty comes as a second decision against the company after the CCI imposed a penalty of Rs. 1337.76 Crore on Google under Section 27 of the Competition Act, 2002 on October 20, 2022, for engaging in anti-competitive practices with regard to Android mobile devices.

GOOGLE PLAY’S BILLING SYSTEM

The “mandatory” use of Google Play’s Billing System (“GBPS”) for paid apps and in-app purchases, believed by the CCI to have imposed an unreasonable constraint on app creators, is the subject of the decision. According to Google’s existing Play Store regulations, app developers must exclusively and compulsorily utilise GPBS for both; in-app purchases and payments for apps distributed or sold through the Google Play Store. For instance, if Epic Games were to function on the Google Play Store and list Fortnite, they would have to configure their billing system according to Google as opposed to using commonly used payment apps such as PayTM or PhonePe. If the app developers do not comply with the policy used by Google, they are not permitted to list their apps on the Play Store and, consequently, losing out on the huge potential consumer base represented by Android users. India’s Anti-Trust regulator opined that making access to the Play Store dependent on mandatory usage of GPBS for paid apps and in-app purchases is one-sided and arbitrary and devoid of any legitimate business interest, thereby ruling that such a policy is nothing but an abuse of Google’s dominance. Furthermore, the CCI observed that the company’s in-house payment aggregator, Google Pay, had been integrated with the “intent flow methodology” which is superior to the “collect flow methodology that other aggregators are connected with due to lower latency in the former methodology. In the Intent flow methodology, the customer selects UPI as the payment method on your website or app. The intent flow is supported by a list of UPI apps, which is shown. The customers select their preferred app. The UPI app opens with prepopulated payment details. To complete their transactions, customers enter their UPI PIN. After the payment is successful, the customers are redirected to your app or website. In the Collect flow methodology, customers need to enter their UPI ID/VPA. After the ID has been verified, a collect notice is delivered to the customer’s app to finish the transaction. All platforms and devices support this flow. In this view, Google was also found to practice denial of market access. Lastly, with the issue of YouTube, the Commission observed that Google does not employ its GPBS requirements therein, leading to YouTube escaping the service fee that other applications have to pay, and held this practice to be discriminatory.

SUMMARIZING THE CCI’S ORDER

The Commission’s detailed observations pertaining to the tech giant’s anti-competitive practices and its subsequent abuse of dominance can be summarized as follows:

  • Intermediaries like Google shouldn’t exploit their unchallengeable position to force app developers that depend on them to use any of their extra services in addition to their core services, which are app store services.
  • Google cannot restrict app developers from communicating with their users and directing them outside the Google Play Ecosystem, i.e., Anti-steering provisions to promote their apps and offerings.
  • The requirement of GPBS prevents other payment processing service providers from providing services to app developers in regard to the processing of payments for paid apps and in-app purchases.

Currently, Google gains access to competitively important information about the many apps available on the Play Store.

  • These apps’ use of GPBS contributes to the acquisition of additional user data points. The Google-owned services will have an unfair competitive advantage as a result of having access to these downstream competitors’ data sets.
  • Google shall not impose any requirement on app developers that is unfair, unreasonable, discriminatory, or excessive in comparison to the services offered to the app developers.
  • Google is required to maintain total transparency when informing app developers about the services offered and associated costs. Additionally, Google must make its payment policy and eligibility requirements clear in its publications (s).
  • Google shall not, in any way, discriminate against other apps that enable and facilitate financial transactions through Unified Payment Interface payments in India.

In view of these considerations, the Commission imposed a penalty at 7% of its average relevant turnover amounting to Rs. 936.44 crores upon Google on a provisional basis, for violating Section 4 of the Act. Google has been given 30 days to submit the necessary financial information and accompanying documents.

Author’s Name: Shivam Kumar (Jamia Millia Islamia, New Delhi)

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