Bhuvana Marni
Published on: October 27, 2022 at 15:40 IST
Google was fined Rs. 936.44 crores on Tuesday by the Competition Commission of India (Commission/CCI) for abusing its dominant position about its Play Store policy [XYZ vs. Alphabet Inc & Ors].
The CCI further directed Google to participate in anti-competitive behaviour and change it within a predetermined time frame.
“The Commission imposed a penalty @ 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,” a press release issued by the CCI said.
Based on its evaluation, the Commission found that Google dominated the Indian markets for app stores for Android smart mobile OS and licensable operating systems (OS) for smart mobile devices.
Senior Advocate Sajan Poovayya represented Google, with the help of the Google legal team, Advocates from Chandhiok & Co., and Cyril Amarchand.
Auraellia Wang, Senior Competition Counsel, APAC Google, Thomas Bohnett, Smita Ann Andrews, Deeksha Manchanda, Raksha Aggarwal, Avaantika Kakkar (Cyril Amarchand – Head Competition), Kaustav Kundu, Ruchi Verma, Tarun Donadi, and (Secondee Counsel at Google from Cyril Amarchand).
Senior Advocate Jayant Mehta represented Match Group, with assistance from attorneys from Talwar Thakore & Associates and Sarvada Legal, including Abir Roy, Sonam Mathur, Dinoo Muthappa, and Dhruv Dikshit.
Abir Roy, Vivek Pandey, and Tom Thomas, attorneys, represented the Alliance of Digital India Foundation.
Naval Chopra and Yaman Verma of Shardul Amarchand Mangaldas Partners represented the original complainant, whose name was kept confidential.
Summary of CCI findings:
1) The imposition of an unfair condition on app developers is made possible by the need that paid apps and in-app purchases be made through Google Play’s Billing System (GPBS);
2) Google engages in discriminatory practices by refusing to use GPBS for its applications, such as YouTube;
3) the mandatory imposition of GPBS interferes with the incentives for innovation and the capacity of payment processors and app developers to innovate, thereby limiting technical development in the market for in-app payment processing services; and
4) Denial of market access to payment aggregators and app developers due to Google’s mandatory imposition of GPBS;
5) Google’s practices violate Section 4(2)(e) of the Competition Act because they allow Google to misuse its market dominance in the market for mobile operating systems that can be licensed and app stores for Android OS;
6) The various methods employed by Google to integrate its own UPI app with the Play Store in comparison to other competing UPI applications constitutes a breach of Sections 4(2)(a)(ii), 4(2)(c), and 4(2)(e) of the Act.
The CCI pointed out that by not adhering to Google’s policy of using GPBS, app developers would not be allowed to advertise their products on the Play Store, missing out on a sizable market of potential customers in the shape 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,” the press release by CCI explained.
It was opined that selling in-app digital goods constitutes an important means for app developers to monetize 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 Commission also examined allegations that competing UPI apps were left out of the Play Store’s effective payment options, and it discovered that only Google Pay utilized the intent flow methodology, while other UPI apps could only be used using the 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.”
The CCI concluded that Google had misused its dominant position and violated Section 4 of the Competition Act as a result of its activities.
The Commission also suggested the following actions that would aid Google to modify its conduct:
1) Google must permit app developers to use any third-party billing/payment processing services, whether for in-app purchases or for acquiring applications and must not impose any restrictions on this;
2) Google will not impose any anti-steering provisions on app developers and won’t prevent them from communicating with consumers to promote their apps and offerings;
3) Google will not put any limitations on how end users can access and use the features and services provided by app developers;
4) Google must create a clear and transparent policy on the data that is collected on its platform, how the platform uses that data, and whether or not it ever shares such data with third parties, including related entities.
5) Google must not use the transactional or customer data of apps produced and obtained through GPBS to advance its competitive advantage;
6) Google must not impose on app developers any requirement (including price-related requirements) that is unfair, unreasonable, discriminatory, or disproportionate in comparison to the services offered to the app developers;
7) In addition to publishing the payment policy and the requirements for its applicability unambiguously, Google must ensure complete transparency when communicating to app developers about the services offered and the associated fees.
8) In addition to publishing the payment policy and the requirements for its applicability unambiguously, Google must ensure complete transparency when communicating to app developers about the services offered and the associated fees.
The Commission, acting in the interests of justice and to achieve the fastest possible market correction, assessed Google a provisional monetary penalty of Rs 936.44 based on the information it provided, and it was given 30 days to produce the relevant financial information and accompanying documentation.
The CCI fined Google Rs. 1337.76 crores last week for abusing its dominating position in multiple markets within the Android mobile ecosystem.
