SC showdown: Google’s battle against Rs. 1337 Crore CCI’s penalty turning into legal clash with Indian start-ups

Introduction

The Competition Commission of India (CCI) via order in 2023 imposed a penalty of Rs. 936.44 crore on Google for abusing its dominant position specifically concerning its Play Store policies. The Commission directed Google to cease participating in anti-competitive practices as contravening section 4 of the Act and also directed it to modify its conduct within a specified timeline.

The NCLAT in January 2024 had directed Google to deposit 10 per cent of the? 1337.76 crore fine amounts imposed on it by the CCI. Further, the tribunal dismissed the CCI's directive to Google to not restrict the ability of app developers to distribute their apps through side-loading.

The issue with Google’s Play Store

• CCI 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.
• Google’s Play Store policies require the App developers to exclusively and mandatorily use Google Play's Billing System (GPBS) not only for receiving payments through the Google Play Store but also for certain in-app purchases.
• Further, app developers cannot provide users with a direct link to a webpage containing an alternative payment method or use language that encourages a user to purchase the digital item outside of the app (anti-steering provisions) within an app.
• If the app developers do not comply with Google’s policy of using GPBS, will lose out on the vast pool of potential customers in the form of Android users.
• Making access to the Play Store dependent on obligatory usage of GPBS for paid apps and in-app purchases is unilateral, arbitrary and devoid of any justifiable business rationale. The app developers are left bereft of the fundamental choice to opt for a payment processor of their preference from the open market.
• The Play Store's exclusion of competing UPI apps as viable payment alternatives is a noteworthy concern. Google Pay's integration using the intent flow methodology is acknowledged, while other UPI apps are relegated to the collect flow methodology. The distinct advantages of intent flow, offering superior user-friendliness and higher success rates, have been highlighted. Google, in response to the CCI, asserts recent policy changes permitting the integration of rival UPI apps with the intent flow method

Contentions

• It was argued that the changes would compel the company to renegotiate agreements with over 1,100 device manufacturers and numerous app developers.
• It was further argued that predatory apps expose users to financial fraud, data theft, and various internet-related risks, both from India and other countries. It takes responsibility for the apps on the Play Store, conducting malware scans and complying with local laws. Google said that the same level of scrutiny may not be in place for apps sideloaded from other sources.
• It raises concerns about the existence of numerous Android versions, often referred to as 'forks,' stating that this practice undermines the consistent and predictable ecosystem that has benefited users and developers for more than 15 years.

Judgement

The appeal was filed to the National Company Law Appellate Tribunal (NCLAT) which upheld a decision of the Competition Commission of India (CCI) about the penalty, prompting Google to challenge the same in its appeal before the Supreme Court.

Recent Developments

• Now, Indian start-up companies vehemently oppose the delisting of multiple apps by Google, accusing the tech giant of levying a platform service fee on the Play Store.
• The disagreement centres on efforts by the resistance of some Indian start-ups against Google from imposing an 11%-26% fee on in-app payments, despite orders from the country's antitrust authorities to refrain from enforcing an earlier fee of 15%-30%.
• Google delisted at least 24 apps from ten Indian developers from its Play Store for not complying with its payment policy. These include all thirteen apps from Matrimony.com --- such as Kerala Matrimony and Jodii, Bharat Matrimony, --- three apps from InfoEdge, Naukri Recruiter, and 99Acres, Naukri.com, --- People Interactive’s Shaadi.com, Alt Balaji’s s ALT.
• Delisting means that users of the Android operating system which accounts for almost 95% of India’s Smartphone market --- will not be able to search for and download these apps from Google’s official Play Store.
• The removal of multiple apps such as Matrimony.com, Bharat Matrimony, Jeevansathi, and Truly Madly from the Google Play Store over a dispute for not paying the service fee. he Centre is pushing for collaborative talks between the parent company of these apps and Google, seeking an amicable resolution to the ongoing concerns and disputes.