[News 18]CCI Fines Google Rs. 936 Crore For Mandating Google Play Billing System On App Developers

The Competition Commission of India has imposed a fine of Rs. 936.44 crores on Google for abusing its dominant position with respect to its Play Store policies.

The Commission has taken note that the app stores have become a necessary medium for the distribution of apps to the end users and the availability of app store(s) is directly dependent on OS installed on a smart device and that Google has reaped the benefit of indirect network effects. The commission has found Google in a dominant position in the licensable OS for smart mobile devices and app stores for the Android smart mobile OS market.

Further, the commission in its order stated that Google’s Play Store Policies require app developers to exclusively and mandatorily use Google Play Billing System (GPBS). Such a Billing System is deployed not only for purchasing the app but also for the in-app purchases within the app and the app developers cannot provide a separate link to a webpage for the payments for in-app purchases. Terming such practice arbitrary and devoid of any legitimate interest of business, the Commission said that if app developers did not comply with the policy, they were not allowed to list their apps on the play store and therefore would lose a vast pool of customers in the form of android users.

The commission said that

“The Commission has also examined the allegations of exclusion of rival UPI apps as effective payment options on Play Store. It was found that Google Pay has been integrated with intent flow methodology whereas other UPI apps can be used through collect flow methodology. It was noted that 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 Commission concluded the following:

• Mandatory use of GPBS for app purchases and in-app purchases constitutes an imposition of unfair conditions on app developers.
• Google, by not imposing the same conditions on its own application ‘Youtube’, is discriminatory since Youtube is not paying any fee to Google and therefore Google has abused its dominant position
• Mandatory use of GPBS disturbs innovation by payment processors and app developers along with limiting technical development in the market.
• Mandatory use of GPBS results in the denial of market access for payment aggregators and app developers.

The Commission passed the following order:

• Google should not restrict app developers from using third-party billing processing services for app purchases and in-app purchases
• Google shall not impose any Anti-steering Provisions on app developers and shall not restrict them from communicating with their users to promote their apps and offerings, in any manner
• Google shall not restrict end users, in any manner, to access and use within apps, the features, and services offered by app developers.
• Google shall formulate a policy on data collected from its platform and sharing of such data with app developers and related entities.
• The competitively relevant transaction or consumer data of apps generated and acquired through GPBS, shall not be leveraged by Google to further its competitive advantage.
• Google shall not impose any condition (including price-related conditions) on app developers, which is unfair, unreasonable, discriminatory, or disproportionate to the services provided to the app developers.
• Google should keep transparency for fees charged to app developers and publish in an unambiguous manner the payment policy and criteria for the applicability of the fee.
• Google shall not discriminate against other apps facilitating payment through UPI in India vis-à-vis its own UPI app, in any manner.

The Commission imposed a penalty of 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 a time of 30 days to provide the requisite financial details and supporting documents.

Last week, CCI imposed a fine of Rs.1300 crore on Google for abusing its dominant position in the licensable OS for smart mobile devices market, app store for Android smart mobile OS market, general web search services market, non-OS specific mobile web browsers market, online video hosting platform (OVHP) market in India. Google had abused its dominant position by entering into Mobile Application Distribution Agreement (MADA), Anti-fragmentation Agreement (AFA), Android Compatibility Commitment Agreement (ACC), Revenue Sharing Agreement (RSA)