India's competition regulator orders Google Play payment probe

Choice of alternative payment providers labelled 'illusory' – because none existed

India's competition regulator, the Competition Commission of India (CCI), has ordered an investigation into Google's in-app billing systems after accusations they levy excessive charges and are discriminatory.

CCI found prima facie merit in complaints from four different entities that Google has charged discriminatory service fees, denied market access, restricted technical development and all around abused its dominant position.

Google was fined and ordered to make changes to Play store policy in 2022. At the time, its in-app fees ranged from 15 to 30 percent. The ad giant allowed developers to reduce fees by four percent if they used an alternative third-party billing system.

However, as the CCI pointed out [PDF], no competitors existed at the time.

"Google is offering an illusory choice for users to opt for an alternative billing option next to Google Play's billing system," stated the regulatory body in its assessment of Google's User Choice Billing (UCB) pilot.

"It appears that Google has used its virtual monopoly power to reap trading benefits which it would not have reaped if there had been effective competition. Given this complete dependence of app developers on Google Play store, the price being charged by Google appears to be unfair in itself," argued CCI.

The CCI document also alleges that Play Store fees have "no reasonable economic relation to the services provided by Google."

Another allegation in the complaints described by CCI is that Google has created "arbitrary distinctions" between apps that offer digital goods and services and those that offer physical goods and services – despite both using the same developer resources, discovery and distribution services.

"Yet Google applies a service fee on Digital Delivery Apps but not on Physical Delivery Apps," observed the regulatory body.

India and Google have disagreements on many issues – most recently regarding the removal of apps the search giant alleged violate its billing protocol. India's minister for Railways, Communications, Electronics & Information Technology, Ashwini Vaishnaw, intervened and over 100 apps were restored.

India's startups, through the Alliance of Digital India Foundation (ADIF), called for the investigation with CCI, alleging Google's actions were "brazen."

A similar fight has already been fought with both Google and Apple in South Korea. The government passed a law in 2021 requiring the mobile duopolists to offer third-party payment options in their app stores.

Google agreed to comply in early October 2021, but that doesn't mean things have been smooth since. The next year, it was determined by South Korea's Communications Commission to be in noncompliance.

And in 2023, The Chocolate Factory was fined for anticompetitive practices after it tried to favor customers who did not use an upcoming South Korean competitor. ®

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