CCI Imposes ₹936.44 Crore Cost On Google, Says Google Play's Mandatory Billing System For Paid Apps & In-App Purchases Unfair

The Competition Commission of India on Tuesday said it has imposed a penalty of Rs. 936.44 crore on Google for abusing its dominant position with respect to its Play Store policies, apart from issuing a cease-and-desist order. The Commission also directed Google to modify its conduct within a defined timeline and restrain from indulging in anti-competitive practices.The order has been passed in respect of the "mandatory" usage of Google Play's Billing System (GBPS), for paid apps and in-app purchases - which the CCI said constitutes an imposition of unfair condition on app developers. "Thus, Google is found to be in violation of the provisions of Section 4(2)(a)(i) of the [Competition] Act," it said. CCI Imposes ₹936.44 Crore Cost On Google, Says Google Play's Mandatory Billing System For Paid Apps & In-App Purchases Unfair https://t.co/oMsGtbbCWB— Live Law (@LiveLawIndia) October 25, 2022Google's Play Store constitutes the main distribution channel for app developers in the Android mobile ecosystem, which allows its owners to capitalize on the apps brought to market."Based on its assessment, the Commission found Google to be dominant in the markets for licensable OS for smart mobile devices & market for app stores for Android smart mobile OS, in India," the CCI said in a press release.CCI said selling of in-app services constitutes an important means for app developers to monetise their creations/innovations. "However, for in-app digital goods to be distributed to purchasing users, developers must configure their apps so that all purchases of the digital goods go through Google's payment system, which processes the transactions," the competition regulator said.The regulator further said that Google's Play Store policies require the App developers to exclusively and mandatorily use GPBS not only for receiving payments for Apps, distributed or sold through the Google Play Store, but also for certain in-app purchases."If the app developers do not comply with Google's policy of using GPBS [Google Play's Billing System], they are not permitted to list their apps on the Play Store and thus, would lose out the vast pool of potential customers in the form of Android users. 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. The app developers are left bereft of the inherent choice to use payment processor of their liking from the open market," it said The CCI said it examined the allegations of exclusion of rival UPI apps and found that Google Pay has been integrated with "intent flow methodology" whereas other UPI apps can be used through "collect flow methodology"."The intent flow technology is superior and user friendly than collect flow technology, with intent flow offering significant advantages to both customers and merchants and the success rate with the intent flow methodology being higher due to lower latency. Google has informed the Commission that it has recently changed its policy and has allowed rival UPI apps to be integrated with intent flow," the body explained in its press release.The mandatory imposition of GPBS disturbs innovation incentives and the ability of both the payment processors as well as app developers to undertake technical development and innovate "and thus, tantamount to limiting technical development in the market for in-app payment processing services. in violation of the provisions of the Act. Thus, Google is found to be in violation of the provisions of Section 4(2)(b)(ii) of the Act," it said further.The CCI further said it also results in denial of market access for payment aggregators as well as app developers, in violation of the provisions of Section 4(2)(c) of the Act."The practices followed by Google results in leveraging its dominance in market for licensable mobile OS and app stores for Android OS, to protect its position in the downstream markets, in violation of the provisions of Section 4(2)(e) of the Act," it held.According to the CCI, the different methodologies used by Google to integrate, its own UPI app vis-à-vis other rival UPI apps, with the Play Store results in violation of Sections 4(2)(a)(ii), 4(2)(c) and 4(2)(e) of the ActCCI further said Google's practice of not using GPBS for Youtube is discriminatory. "This also amount to imposition of discriminatory conditions as well as pricing as YouTube is not paying the service fee as being imposed on other apps covered in the GPBS requirements. Thus, Google is found to be in violation of Section 4(2)(a)(i) and 4(2)(a)(ii) of the Act," it said.Directing Google to cease and desist from indulging in anti-competitive practices, the CCI asked it to implement following measures:Google shall allow, and not restrict app developers from using any third-party billing/ payment processing services, either for in-app purchases or for purchasing apps. Google shall also not discriminate or otherwise...

CCI Imposes ₹936.44 Crore Cost On Google, Says Google Play's Mandatory Billing System For Paid Apps & In-App Purchases Unfair

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