In a significant move, the Competition Commission of India (CCI) on Friday ordered an investigation into Google for excessive pricing on Play Store, noting that the tech giant’s Users Choice Billing (UCB) payments policy was “prima facie” violative of the Competition Act 2002.

This CCI move may come as some music to the ears of the warring domestic start-ups in their ongoing four-year-old dispute with the tech giant on the latter’s anti-competitive conduct arising from a dominant position in Android ecosystem and its App Store Google Play.

The competition watchdog on Friday directed its Director General (Investigation) to complete the investigation and submit a consolidated report in 60 days, according to the 21-page order of the CCI. “The Commission is of the prima facie view that Google has violated the provisions of section 4(2)(a), 4 (2)(b) and 4(2)(c) of the Act as elaborated supra, which warrants, detailed investigation”, the CCI order said.

Unfair fee

The CCI order noted that Google’s imposition of unfair service fee (as high as 26 percent) on app developers could force them out of the market or deter them from entering it due to increased operational costs, thus denying market access to these developers. It has also been highlighted that the tech giant’s behaviour curtails the freedom of app developers to select their business model and user engagement method.

It maybe recalled that CCI had on February 21 conducted a hearing of both the litigating domestic start-ups and the tech giant Google as regards the contentious issue of non-compliance of CCI’s October 25, 2022 order in the Google Play Store App Billing case. 

The latest CCI move ordering investigation on Google’s excessive pricing at Play Store came in response to three separate information cases — which have been clubbed — moved by People Interactive India (shaadi.com); Mebigo Labs (KukuFM); and Indian Broadcasting and Digital Foundation (IBDF) and Indian Digital Media Industry Foundation (IDMIF).

These three parties had separately alleged that Google Play Store’s payment policies were discriminatory in nature and opposed the excessive fees/commission (up to 26 per cent) levied on the app developers by the tech giant for download of apps and in-app purchases of users. 

SC hearing

The latest CCI move ordering investigation comes a few days ahead of the crucial Supreme Court hearing of March 19 when the Special Leave Petitions (SLP) of a dozen domestic start-ups would be heard by the apex court. These start-ups had moved the Supreme Court in appeal against the Madras High Court’s Division Bench order that redirected the start-ups to approach CCI for legal remedy against tech giant Google’s User Choice Billing policy.

Start-ups contend that Google had violated CCI’s earlier order asking the tech giant not to restrict app developers from using third party billing or payment processing services to purchase apps for in app purchases on Google Play.

As a result of the Google’s alleged discriminatory policies, a limited set of app developers have claimed to bear the burden of huge costs, significantly impacting their profitability, commercial operations and ability to effectively compete with other apps who are not made to bear such costs. The ongoing dispute between Google and some domestic start-ups had recently intensified after the tech giant unilaterally removed certain apps from Play Store. However, these apps were reinstated by Google on March 5 on a “temporary basis”.

Supreme Court had on February 9 refused to grant interim protection to domestic start-ups against any removal of their apps by the tech giant for any non-compliance with its payment policy. CCI had in October 2022 directed Google not to restrict app developers from using any third-party billing system to purchase apps or for in-app purchases. The competition watchdog had fined Google ₹936.44 crore for abusing its dominant position in Google Play Store. An appeal against this fine is now pending before the National Company Law Appellate Tribunal (NCLAT).