May 29, 2023

India fined Google $113 million and ordered it to allow third-party payments on the Play Store

India’s antitrust watchdog has fined Google $113 million for abusing its dominant position in the Google Play Store and ordered the company to allow app developers to use third-party payment processing services for in-app purchases or in-app purchases. a penalty for the Android maker in as many weeks in its biggest market.

The Competition Commission of India, which opened an investigation into Google in late 2020, said that requiring developers to use Google’s own billing system for paid apps and in-app purchases through the Play Store “amounts to the imposition of an unfair condition” and thus violates the provisions of the convention. in accordance with section 4, subsection 2, subsection a, subsection i of the Act.

The regulator – which interviewed several industry players including Paytm, Zomato, Info Edge, Samsung, Vivo, Xiaomi, Microsoft and Realme as part of the probe – said that Google does not use a billing system for its own apps, such as YouTube “imposing discriminatory conditions.”

The study also found the following:

Mandatory implementation of GPBS [Google Play Billing System] interferes with incentives to innovate and the ability of both payment processors and application developers to engage in technical development and innovation, thereby limiting technical development in the market for in-app payment processing services. contrary to the provisions of the law. Accordingly, Google is found to have violated the provisions of Section 4(2)(b)(ii) of the Act.

Google’s mandatory imposition of GPBS also results in denial of market access to payment aggregators and app developers, in violation of Section 4(2)(c) of the Act.

The practices followed by Google lead to the exploitation of its dominant position in the market for licensable mobile operating systems and Android operating system application stores in order to protect its position in the downstream market, which violates the provisions of Section 4(2)(e) of the Act.

The various methods used by Google to integrate its own UPI application with other competing UPI applications in the Play Store result in sections 4(2)(a)(ii), 4(2)(c) and Section 4(2)(e) of the Act.

India is Google’s largest market by users. The company has poured billions of dollars into the South Asian market over the past decade as it aggressively seeks to find significant untapped areas globally to fuel its growth.

The company reaches almost all of India’s 600 million internet users. Android dominates 97 percent of the local smartphone market. Its payments app, Google Pay, is the second-largest payment provider on the UPI network, an infrastructure built by a consortium of banks that has become the preferred way for Indians to transact online.

The antitrust watchdog has called on Google to make a series of changes to its Play Store policies that, like allowing developers to use a third-party billing system, require compliance within three months:

Google does not impose anti-tracking regulations on app developers and does not restrict them from communicating with their users to promote their apps and offers in any way.

Google does not restrict end users in any way from accessing and using the features and services provided by the application developers in the applications.

Google establishes a clear and transparent policy regarding the data collected on its platform, the platform’s use of such data, and also the potential and actual sharing of such data with application developers or other parties, including related parties.

Google may not use competitively relevant event/consumer data from applications created and acquired through GPBS to further its competitive advantage. Google also provides the application developer with access to data generated through that application, provided that this provision emphasizes appropriate safeguards.

Google will not impose terms (including price-related terms) on App Developers that are unfair, unreasonable, discriminatory, or disproportionate to the services provided to App Developers.

Google ensures complete transparency when communicating with app developers, about the services offered and the corresponding fees charged. Google also publishes payment policies and payment application criteria in an unambiguous manner.

Google does not in any way discriminate against other apps that facilitate payment through UPI in India compared to its own UPI app.

“The Commission hereby directs Google to cease and desist from anti-competitive practices,” CCI said in a statement on Tuesday.

In recent years, Google and Apple have faced heat from developers worldwide for requiring them to use their own billing systems and thereby collecting substantial fees. In response, Google has started looking into offering developers in some markets, including India, the ability to use a third-party payment system for purchases on the Play Store.

Last week, the competition authority fined Google $161.9 million for anti-competitive practices related to Android mobile devices and imposed a series of strict remedies.

The watchdog examined whether Google had taken a dominant position in five different markets: licensable operating system for smartphones, app store, web search services, non-OS mobile browsers and online video hosting platform in India. Google was dominant in all of these relevant markets, the regulator said.

The antitrust watchdog said device makers shouldn’t be forced to install Google’s suite of apps, and the search giant shouldn’t block access to Play Services APIs, as well as financial and other incentives from suppliers. Amazon told the regulator that more than half a dozen device makers had indicated they could not enter into a TV manufacturing relationship with the e-commerce group for fear of retaliation from Google.

In response to last week’s order, Google said the CCI’s decision was a “significant setback for consumers and businesses”, opening them up to “serious security risks” and raising the “price of mobile devices in India”.

Google said Tuesday that its legal team was reviewing the order and had no immediate comment. It expressed concern over the evidence relied upon by the regulator to reach its conclusion, the CCI said in the order.

Google objects to the evidence on which the competition regulator based its conclusion. From page 177 of the order.

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