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India's antitrust agency to probe Google for payment app's practices

Section 4 of the Competition Act pertains to abuse of dominant market position

Topics
Google Pay | CCI | Competition Commission of India

Press Trust of India  |  New Delhi 

Google Pay Photo: Shutterstock
Google Pay

The (CCI) on Monday ordered a detailed probe against internet giant for alleged unfair business practices with respect to Pay as well as Play’s payment system.
 
is a popular digital payments platform while Google Play is the app store on its Android ecosystem.

 
“... the is of the prima facie view that the Opposite Parties have contravened various provisions of Section 4 of the Act... These aspects warrant a detailed investigation,” it said in a 39-page order.
 
The watchdog has ordered a detailed probe by its Director General (DG), which is the investigation arm, for alleged anti-competitive practices with respect to
 
Section 4 of the Competition Act pertains to abuse of dominant market position.
 
The is of the prima facie view that the market for apps facilitating payment through the Unified Payments Interface (UPI) appears to be a distinct relevant market for the assessment of allegations in the present matter, the order said.
 
According to the regulator, “the said conduct of Google amounts to imposition of unfair and discriminatory condition, denial of market access for competing apps of and leveraging on the part of Google, in terms of different provisions of Section 4(2) of the Act.” On the issue of mandatory use of Google Play’s payment system for paid apps and in-app purchases (IAPs), the said “mandatory use of application store’s payment system for paid apps and in-app purchases restricts the choice available to the app developers to select a payment processing system of their choice especially considering when Google charges a commission of 30 per cent (15 per cent in certain cases) for all app purchases and IAPs.”
 
Considering that Play is the dominant source of downloading apps in the Android OS (90 per cent of the downloads) and its condition requiring use of application store's payment system for paid apps and IAPs, it appears that Google controls the significant volume of payments processed in this market, the order said.
 
“The resultant market power being enjoyed by Google due to its grip over Android ecosystem apparently resulted in ‘allegedly’ high commission fee of 30 per cent,” it added.
 
Indian app developers have been voicing concerns over Google’s move to charge 30 per cent commission on paid apps and IAPs. Many such developers have said that Google cannot force domestic app developers/owners to sell digital services by compulsory use of its billing system.
 
According to the CCI, it appears that such allegedly high fee would increase the cost of Google’s competitors and thus might affect their competitiveness vis-s-vis Google’s own verticals.
 
“Such a policy of the application store may disadvantage its competitors in the downstream markets, such as music streaming, e-books/audiobooks etc. If the application developers, in response, raise their subscription fees to offset these costs or remove/reduce premium/paid subscription offers for users, it may affect user experience, cost and choice. Such conditions imposed by app stores limit the ability of the app developers to offer payment processing of their choice to the users for app purchases as well as IAPs... the Commission is of prima facie view that imposition of such condition is unfair in terms of Section 4(2)(a) of the Act," the regulator said.
 
The probe has been ordered against five entities — Alphabet, Google, Google Ireland, Google India, and Google India Digital Services.
 
In 2018, CCI had penalised Google for anti-competitive practices in the Indian market for online search.
 

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First Published: Mon, November 09 2020. 19:05 IST
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