Introduction
The digital ecosystem in India has flourished rapidly over the last decade, with the spread of technological devices and low-cost internet resulting in an explosion in app development. Along with this expansion, the Google Play Store evolved as an invaluable platform, allowing millions of Android users to access various applications. However, on March 15, 2024, in the case of People Interactive India Private Limited v. Google LLC, Google India Digital Services Pvt. Ltd & Ors.[1], the Competition Commission of India (CCI) ordered the investigation of Google’s Play Billing System. The Indian App developers have generated significant questions about the fairness and competitiveness of Google’s operations, particularly the exorbitant fees levied on app developers. This article digs into the complexities of the probe, including the claims against Google, the consequences for app developers, and the overall impact on India’s digital economy.
Background of the Controversy
Google Play Store is a significant player in the Android ecosystem, providing developers with a platform to connect to a vast user base. The Google Play Billing System (GPBS) is an integral part of all apps listed on the Google Play Store, as all the digital goods and services of the listed Apps are sold through this mode of the billing system. Now, considering that Google Play Store provides a service, they charge a commission fee ranging from 10% to 30% on all transactions. Furthermore, this business model is similar to Apple’s App Store. Hence, the crucial question arises regarding what Google Play Store is doing differently, making this a prima facia anti-competitive practice. The Google Play store charges a commission fee on “User Choice Billing” (UCB), wherein they do not provide any billing services, and yet the app developers have to pay commission fees ranging from 6% to 26%.
The primary issue in the CCI’s investigation is the claim of whether Google has violated the provisions of Section 4(2)(a), 4(2)(b) and 4(2)(c) of the Competition Act 2002. Additionally, the app developers have alleged that Google is selectively and arbitrarily imposing its payment policy in a discriminatory manner and using its dominant position in the Android market.
CCI’s Order and Preliminary Findings
The CCI’s order to investigate Google’s practices came after a prima facie finding that Google’s conduct could potentially violate Section 4(2)(a), 4(2)(b) and 4(2)(c) of the Competition Act 2002. Hence, the CCI ordered a detailed investigation of the practice of User Choice Billing. Also, CCI noted that Google has a dominant position in the market and the practice of charging commission fees up to 26% on a UCB system wherein Google provides very little assistance in billing the payment of goods and services sold by app developers. Hence, it would come under the purview of section 4, which provides for unfair and discriminatory practices. This investigation will scrutinise Google Play Store’s policy on charging high commission fees on a billing system in which Google does not provide any services to app developers.
Impact on App Developers and the Broader Digital Ecosystem
The decision of the CCI to order an investigation is significant, especially for Indian app developers, because there is an enormous app developer industry, with many startups and small businesses relying on digital platforms to reach consumers. The fees imposed on UCB are also a massive grievance after the grievance of the commission fees imposed on GPBS. Hence, these commission fees significantly reduce app developers’ profit margins.
For many upcoming developers, these high costs are a barrier to their business. Both the billing systems have high commission fees, and the app developers are indirectly forced to pay these high fees or risk being delisted from the Google Play Store, which would adversely affect their market reach, given Google’s dominance in the Android market. This probe may also impact India’s broader digital ecosystem. A ruling against Google might set a precedent for how tech behemoths operate in the Indian market, encouraging an equal level playing field. Additionally, It may encourage other companies to dispute practices that they perceive as unfair or anti-competitive, resulting in a wave of legal and regulatory measures to ensure fair competition in the digital market.
Google’s Defense
Google has defended its practices, arguing that the fees charged through its billing systems are fair and in line with industry standards. Google also claimed that 97% of developers pay no service fee and benefit from all of Google Play’s services because they are listed as free apps on the Google Play Store. Therefore, these 97% of apps also contribute to the operation costs of the Google Play Store and the Android ecosystem. However, CCI did not consider Google’s arguments and ordered against them.
Conclusion
The CCI’s action in the billing systems of the Google Play Store is pivotal for app developers and India’s digital economy. Moreover, CCI has also ordered the Director General to conduct an independent investigation in a detailed manner without being coloured by the CCI’s prima facie observations on the Google Play Store Billing Systems. Lastly, CCI’s order does not conclude a final expression.
[1] Case Nos. 37 of 2022, 17 of 2023 and 27 of 2023
(Author: Nirmit Jadwani (20113141), 9 BBA LLB, School of Law, CHRIST (Deemed to be University), Pune Lavasa Campus)
