Indian startup body seeks interim relief from CCI against Google's Play Store policy

Indian startup body seeks interim relief from CCI against Google's Play Store policy
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The Alliance of Digital India Foundation (ADIF), an industry body of 422 Indian startups, has filed a petition before the Competition Commission of India (CCI) seeking interim relief from Google’s new PlayStore policy, which goes into effect from next March. 

The development follows CCI initiating a probe against Google in November last year on allegations of abusing its dominant position to force app makers to exclusively use its billing system. 

In its petition to the Commission, a copy of which Mint reviewed, ADIF stated that the 30% commission charged by Google is "extremely high and unfair". Further, the industry body stressed upon that the core issue was of mandatory imposition of the Google Play billing system and the exclusion of other methods of payment.

“ADIF foresees that barring an order passed by this Hon’ble Commission to maintain status quo until the completion of the ongoing inquiry, Google shall proceed to enforce its terms on the Play Store, thereby leading to adverse and irreversible consequences on India’s fledgling startup ecosystem,” said Sijo Kuruvilla George, executive director, ADIF.  

Further, high commissions from Google’s Play Store billing system will have a "destructive effect" on operating margins of a large number of startups, ADIF wrote in the petition. 

Google India did not respond to Mint’s queries until press time. 

“The commission does have the power to give interim relief during an ongoing probe, if it believes there is enough reason to do so. However, this power is used sparsely and the complainants both have to provide additional proof to show how non-grant of this relief will lead to market failure,” said Anisha Chand, partner, competition and antitrust at law firm Khaitan and Co. 

Earlier this year, CCI had given interim relief to hotel chains Treebo and FabHotels, during an investigation against online travel portal MakeMyTrip (MMT) abusing its dominant position.  Even though CCI was still investigating the matter, it had asked MMT to relist properties of Treebo and FabHotels. 

As a part of its November 2020 probe, CCI is currently investigating Google on two counts comprising “exclusivity regarding the mode of payment for the purchase of apps and in-app purchases", and “pre-installation and prominence of Google Pay on Android smartphones".

In March, Google said it will cut its Play Store billing fee globally to 15% from a flat 30% for the first $1 million clocked by a developer annually, for in-app purchases of digital goods. Google had then added that its PlayStore billing system is applicable to only 3% of developers globally, who actually sell in-app digital goods and services.  The enforcement timeline for non-compliant Indian developers, which sell digital goods to use the Play billing system is until March 2022. 

“The matter is not as much about the percentage of commission charged as it is about the anti-competitive practice of forcing a payment option as well as of forcing out other payment providers. If not kept in check, such anti-competitive policies and gatekeeper commissions will be imposed on more and more categories, causing a disastrous effect on competition and prices in India,” said Murugavel Janakiraman, the Founder and CEO of Matrimony.com. 

Last year, startup founders, including Paytm’s Vijay Shekhar Sharma and Razorpay’s Harshil Mathur, publicly criticized Google for making it mandatory for app makers to use its own payment tools for purchases made through the Play Store.