CCI Directs Investigation Against Google Pay For Alleged Abuse Of Dominant Position [Read Order]

The Competition Commission of India has ordered investigation against Google Pay for alleged abuse of dominant position.The Commission expressed a prima facie view that mandatory use of Google Play store's payment system for paid apps & in-app purchases restricts the choice available to the app developers to select a payment processing system of their choice especially considering when Google charges a commission of 30% (15% in certain cases) for all app purchases and IAPs. "Further, it is noted from one of the support pages of Google Play Store that Google Pay is the only UPI based app allowed to be used as a valid payment method . In view of the above, the Commission is of the prima facie view that said conduct of Google amounts to position of unfair and discriminatory condition, denial of market access for competing apps of Google Pay and leveraging on the part of Google, in terms of different provisions of Section 4(2) of the Act.", the commission said. It also noted that the pre-installation of GPay may create a sense of exclusivity and default as users may not opt for downloading competing apps.The complaint before CCI in this regard raised the following issues: (a) mandatory use of Google Play's payment system for purchasing the apps & IAPs in the Play Store and (b) excluding other mobile wallets/UPI apps as one of the effective payment options in the Google Play's payment system (c) Google encourages pre-installation and opting of Google Pay as the default payment option on new smart mobile devices using the Android OS at the time of initial set up (d) Prominent placement of Google Pay on the Play Store (e) Search advertisement manipulation on the Play Store (f) Exclusivity Requirement Imposed by Google Resulted in Unfair Terms Being Imposed on Users.Regarding the first three issues, the commission agreed with the complainant's allegations and ordered investigation on those counts. The other allegations, the commission found, are not grounds to order investigation.A Bench headed by Chairperson Ashok Kumar Gupta has directed the Director General to conduct an investigation into the matter under Section 26(1) of the Competition Act, 2020, and conclude the same within a period of 60 days. The order has come in a complaint filed by an anonymous Informant, alleging that through its control over Play Store and Android Operating System, Google is favouring GPay over other competing apps, to the disadvantage of both i.e. apps facilitating payment through UPI, as well as users. Exclusivity Regarding Mode of Payment for Purchase of Apps and In-App Purchases It was alleged that Google mandates apps to use Play Store's payment system and GPay In-App Billing for charging their users for purchase of apps on Play Store and In-App purchases. It was submitted that by making listing of an app on Play Store conditional on the app using Play Store's payment system and Google Play In-App Billing for charging their users, Google is imposing a "take it or leave it" condition on all app providers. "If apps do not comply with Google's demand of using Play Store's payment system and Google Play's In-App billing, they will not be able to access more than 90% of the target users in India, which is not a feasible option for any app provider," the Informant had alleged. The Bench, also comprised of Sangeeta Verma and Bhagwant Singh Bishnoi (Members) was also of prima facie view that mandatory use of application store's payment system for paid apps & in-app purchases restricts the choice available to the app developers to select a payment processing system of their choice, especially considering when Google charges a commission of 30% (15% in certain cases) for all app purchases and IAPs. Further, it observed that considering that Play is the dominant source of downloading apps in the Android OS and its condition requiring use of application store's payment system for paid apps & in-app purchases, it appears that Google controls the significant volume of payments processed in this market. It observed, "The resultant market power being enjoyed by Google due to its grip over Android ecosystem apparently resulted in 'allegedly' high commission fee of 30%. …Such 'allegedly' high fee would increase the cost of Google's competitors and thus might affect their competitiveness vis-à-vis Google's own verticals (the fee in respect of which, in any case would be internalized). Such a policy of the application store may disadvantage its competitors in the downstream markets, such as music streaming, e-books/ audiobooks etc. If the application developers, in response, raise their subscription fees to offset these costs or remove/reduce premium/paid subscription offers for users, it may affect user experience, cost and choice. Such conditions imposed by the app stores limit the ability of the app developers to offer payment processing solutions of their choice to the users...

CCI Directs Investigation Against Google Pay For Alleged Abuse Of Dominant Position [Read Order]

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