India’s app developers, start-ups seek interim relief from CCI against Google’s new billing policy

This article is focus about the Alliance of Digital India Foundation (ADIF) on behalf of India’s app-developers & the start-up community has filed a petition before the Competition Commision of India (CCI) against Google’s new billing policy which comes into effect from March 2022. The competition watchdog is currently investigating tech giant Google’s alleged abuse of dominance in the smartphone, smart TV industries, and the app market in India.

ADIF said in a statement that it has sought relief on behalf of app developers as Google’s new policy will restrict certain categories of apps to only use the Google Billing System (GBS) for accepting payments.

“This would be an issue for app developers because GBS charges 30 per cent commission for all transactions on the Google Play Store, compared to 2 per cent charged by other payment processing systems. There is a strong case for seeking such relief as this new policy, when it goes into effect next March, would have a destructive effect on the operating margins of a large number of start-ups and make their business models infeasible,” ADIF 

Google had earlier mandated that app developers, who use its Android Play Store, to make transactions only through the tech firm’s billing system, under which the company will seek 30 per cent commission.

Whereas, The Mountain View, California-headquartered firm later deferred its policy after the start-ups and app developers raised concerns regarding Google's policy and took the matter to the regulatory authorities. They alleged that the search engine giant is misusing its dominant position in the Android market. Google commands nearly 97 per cent market share in India.

The issue is not restricted to just India. In the US, for instance, Google is facing the biggest ever anti-trust probe in decades, with the US Department of Justice alleging that the tech giant is maintaining its monopoly in the market through unhealthy practices and paying millions of dollars to companies to promote its search engine in its products .

The CCI had in November of last year directed a probe by the Director General into the issue of mandatory use of Google Play Store’s payment system for paid apps and in-app purchases. The commission is of the prima facie view that such a policy is unfair as it restricts the ability of app developers to select a payment processing system of their choice.

In its petition to the commission, ADIF, which represents the interests of various stakeholders, such as start-ups, app developers, etc. and espouses the objective of improving the start-up ecosystem of the country, has stated that the 30 per cent commission charged by Google is extremely high and unfair. However, the organisation also said that the core issue is the mandatory imposition of the Google Play Billing system and the exclusion of other methods of payment.

“This will have a disastrous effect on India’s digital ecosystem by reducing choices available in the hands of app developers and users as well as harming the country's innovation ecosystem by disrupting the cost structures and margins of multiple industries,” it said.

“ADIF foresees that barring an order passed by this Hon’ble Commission to maintain status-quo until the completion of the ongoing inquiry, Google shall proceed to enforce its terms on the Play Store, thereby leading to adverse and irreversible consequences on India’s fledgling startup ecosystem,” said Sijo Kuruvilla George, Executive Director, Alliance of Digital India Foundation.