Google gets another ₹936.44 cr penalty for anti-competitive practices

The country's anti-trust regulator Competition Commission of India (CCI) has imposed another penalty worth ₹936.44 crore on tech behemoth Google Inc for anti-competitive practices in relation to its Play Store policies.

The CCI, in its latest order, says Google abused its dominant position with regard to its Play Store policies. Issuing a cease-and-desist order, the commission said Google has 30 days to provide the requisite financial details and supporting documents.

Just last week on October 20, in a blow to Google, the antitrust watchdog imposed ₹1,337.76 crore penalty on it for allegedly abusing its dominant position in multiple markets in the Android Mobile device ecosystem.

The CCI states that it found "glaring inconsistencies and wide disclaimers" in revenue data points presented by Google. "However, in the interest of justice and with an intent of ensuring necessary market correction at the earliest, the CCI quantified the provisional monetary penalties on the basis of the data presented by Google. Accordingly, the CCI imposed a penalty @ 7% of its average relevant turnover amounting to ₹936.44 crore upon Google on provisional basis, for violating Section 4 of the Act."

In relation to the latest penalty, Google says its Play Store policies have "powered India's digital transformation" and that "Indian developers have benefitted from the technology, security, consumer protections, and unrivalled choice and flexibility that Android and Google Play provide". A Google spokesperson adds the company is reviewing the latest CCI order.

The CCI order says Google’s Play Store policies require the app developers to "exclusively and mandatorily" use Google Play's Billing System (GPBS). It must not only be done for receiving payments for apps (and other digital products like audio, video, and games) sold through the Google Play Store but also for certain in-app purchases. App developers can't, within an app, provide users with a direct link to a webpage containing an alternative payment method or use language that encourages a user to purchase the digital item outside of the app.

If the app developers do not comply with Google’s policy of using GPBS, they are not permitted to list their apps on the Play Store. Thus, they lose out on the vast pool of potential customers in the form of Android users. “Making access to the Play Store dependent on mandatory usage of GPBS for paid apps and in-app purchases is one-sided and arbitrary and devoid of any legitimate business interest. The app developers are left bereft of the inherent choice to use payment processor of their liking from the open market," the CCI order stated.

The regulator found Google to be dominant in the licensable OS markets for smart mobile devices and app stores for Android smart mobile OS, in India. For app developers, app stores have become a necessary medium to distribute apps to end users. “An appreciation of the market dynamics in the licensable mobile operating system in India makes it evident that Google’s Android OS has successfully reaped the indirect network effects," says the CCI order.

Notably, selling in-app digital goods constitutes an important means for app developers to monetise creations. However, for in-app digital goods to be distributed to purchasing users, developers must configure their apps so that all purchases of the digital goods go through Google’s payment system, which processes the transactions.

The CCI also examined the allegations of the exclusion of rival UPI apps as effective payment options on the Play Store. It found that Google Pay has been integrated with intent flow methodology, superior and user-friendly due to lower latency, whereas other UPI apps can be used through collect flow methodology. The CCI says Google informed it that it recently changed its policy and has allowed rival UPI apps to be integrated with the intent flow.

Based on its assessment, the CCI has said Google must allow and not restrict app developers from using any third-party billing or payment processing services, either for in-app purchases or for purchasing apps. Google should also not take action against such apps using third-party billing services. The tech giant will not impose any anti-steering provisions on app developers and not restrict them from communicating with users to promote apps and offerings, says the CCI.

Google has also been asked to not restrict end-users from accessing and using features and services offered by app developers within apps. Additionally, Google has been asked to set out a transparent policy on data collection, and its use. The consumer data of apps generated through GPBS should also not be leveraged by Google to further its competitive advantage.