Indian start-ups see apex tribunal's order against Google as a win

But fees charged by Google for app purchases remain a concern

Indian start-ups and app developers appeared to be content with the recent National Company Law Appellate Tribunal’s (NCLAT’s) judgment that upheld the findings of the Competition Commission of India (CCI) against Google on misusing dominant position in the Android mobile device ecosystem, even as it set aside four key directives of the competition watchdog to the tech giant.

They are now keeping a watch on the implementation of the CCI’s directive concerning fees levied by Google for services and digital items sold via apps on Android devices.

In a partial relief to Google, the NCLAT on Wednesday reversed four of the 10 key non-monetary directives that would have forced Google to allow uninstalling of its pre-installed apps on Android devices. The directive that asked the tech giant to allow individual app store developers to distribute their app store via Google Play Store was also quashed. This CCI order was a major concern for Google as it technically allowed other app stores on Play Store.

Still, Indian app developers largely welcomed the ruling which upheld the penalty of Rs 1,337.76 crore on Google, as it would stop mandatory pre-installation of Google’s proprietary apps, such as Chrome, G Pay, Gmail, and Maps on Android smartphones. Another contentious part of the CCI’s directives that OEMs should be permitted to manufacture or develop Android forks-based smart devices was also allowed.

Snehil Khanor, co-founder & CEO of TrulyMadly.com, said while there is a breather for Google, the tone and tenor of the verdict are against it and prove abuse of dominance by Google.

“For all the issues framed on abuse of dominance, the NCLAT has upheld the CCI order and found that Google has abused its dominant position in the relevant market. This now proves, beyond doubt, Google's abusive conduct and its resultant effects on the market. The NCLAT also upheld the CCI direction on unbundling and giving choices to OEMs and in the process, end users. We believe this is a very good start,” Khanor said.

According to industry sources, the Indian app developers’ community is more concerned about the implementation of the other part of the CCI’s findings, which are related to third-party billing or payment processing services for app purchases, as well as in-app purchases. 

The CCI directed Google to allow app developers to use a user-choice billing system. While Google has complied with this order, it charges 11-26 per cent service fees on payments made through an alternative billing system. Leading stakeholders of the Indian start-up ecosystem -- including Paytm, Bharat Matrimony and Sharechat -- are likely to raise their objections on an “appropriate” platform, Business Standard has learnt.

The NCLAT has observed that the ties between Play Store and Google Search have been used by Google to achieve and perpetuate its dominance. Pavan Nanda, co-founder of social gaming platform WinZO Games, believes: “This is a landmark development.”

He said: “It notes that while Google terms its Android mobile OS offering as ‘free’, it also imposes several apps and services on the same device, whose traffic Google itself monetises. So, the mandatory pre-installation of the GMS suite under agreements with OEMs has been held as an unfair condition.”

Salman Waris, managing partner at TechLegis Advocates & Solicitors, said: “The monetary penalty was not a big thing for Google, but the four directives which are now being diluted were more important; that is the essence of the Google-CCI matter.”

“With this modification in the order and Google getting relief, Google would be able to block indigenous app stores from hosting their apps on Play Store. So it can be a non-starter as far as the Indian app developers or start-ups are concerned,” Waris said. 

Sourabh Deorah, CEO and co-founder of Advantage Club, a global employee engagement platform, said Google should leave more decision-making in the hands of the user. “There won't be any significant changes at the ground level for app developers. At the same time, however, developers will be able to compete more effectively with all the possible uses for their applications on mobile devices.”

Google is currently reviewing the NCLAT order and evaluating its legal options.