The Alliance of Digital India Foundation (ADIF) has filed a petition before the Competition Commission of India (CCI) through their lawyers at Sarvada Legal seeking interim relief from Google’s new Play Store policy which goes into effect from March 2022. The matter is already being looked into by the CCI for potential abuse of dominance by Google in the app market.
This relief has been sought by ADIF on behalf of app developers as Google’s new policy will restrict certain categories of apps to use only Google Billing System (GBS) for accepting payments. This would be an issue for app developers because GBS charges 30% commission for all transactions on the Google Play Store, compared to 2% charged by other payment processing systems. There is a strong case for seeking such relief as this new policy, when it goes into effect next March, would have a destructive effect on the operating margins of a large number of startups and make their business models infeasible.
The CCI had in November 2020 directed a probe by the Director General into the issue of mandatory use of Google Play Store’s payment system for paid apps & in-app purchases. The commission is of the prima facie view that such a policy is unfair as it restricts the ability of app developers to select a payment processing system of their choice.
In its petition to the commission, ADIF, which represents the interests of various stakeholders such as startups, app developers, etc. and espouses the objective of improving the startup ecosystem of the country, has stated that the 30% commission charged by Google is extremely high and unfair. However, the organization said that the core issue is the mandatory imposition of the Google Play Billing system and the exclusion of other methods of payment.
“This will have a disastrous effect on India’s digital ecosystem by reducing choices available in the hands of app developers and users as well as harming the country’s innovation ecosystem by disrupting the cost structures and margins of multiple industries,” it said.
While ADIF will support the ongoing inquiry by the Director General into the matter, it has been compelled to move the application for interim relief to protect the choice of app developers to use other payment systems with far more favorable terms of service. Google’s new policy will exclude competing payment service providers from the market for payments for digital goods consumed through Android devices.
“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, Alliance of Digital India Foundation.
Murugavel Janakiraman, founder and CEO of Matrimony.com, said, “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.”
ADIF believes that if the status quo is not maintained pending the completion of the inquiry, Google will enforce its terms on the Play Store in March 2022, leading to irreversible consequences for India’s startup ecosystem.