India Hits Google With $113 Million Fine for Forcing Apps to Use Google Payments

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The Indian government's antitrust watchdog has fined Google $113 million for abusing its dominant position in the app store market by not allowing developers to use alternative payment processors for in-app purchases and app purchases. This is the second major penalty levied against the Android maker in as many weeks in India, its largest market by user count.

The Competition Commission of India, which initiated the investigation into Google in late 2020, claims that the company's practice of requiring developers to use Google's own billing system for paid apps and in-app purchases through Play Store "constitutes an imposition of unfair conditions" in violation of the Act.

In its investigation, the regulator spoke with several major players in the industry, including Paytm, Zomato, Info Edge, Samsung, Vivo, Xiaomi, Microsoft, and Realme, and concluded that Google's decision to not use its billing system for its own apps like YouTube constitutes "imposition of discriminatory conditions."

As far as user numbers go, India is Google's biggest market. The firm has invested billions in the South Asian sector over the past decade as part of an aggressive global hunt for huge untapped regions to fuel its expansion.

Nearly all of India's 600 million internet users can connect with the firm. Nearly all (97%) of the local smartphone market is now owned by Android. Google Pay, the company's mobile payment service, is second only to the UPI network in terms of transaction volume. This network was developed by a consortium of banks and is now the preferred method of online financial transactions in India.

The antitrust watchdog has directed Google to introduce a series of changes to its Play Store policies, which as with allowing developers to use a third-party billing system, requires compliance within three months:

  • Google shall not prohibit app developers from contacting customers to advertise their apps or services or enforce any other anti-steering measures.
  • End users shall not be limited in any way with respect to their use of the features and services provided by app developers within applications, and Google shall not impose any such limitations.
  • Google is obligated to provide an open and honest policy regarding the information gathered through its platform, how that information will be used internally, and whether or not it will be shared with third parties, such as app developers or other organizations, including those affiliated with Google.
  • Google will not be allowed to use the transactional/consumer data of apps developed and acquired through GPBS to gain an unfair advantage in the market. Subject to the appropriate protections outlined in this decision, Google shall also provide access to the app developer of the data that has been created through the concerned app.
  • Google will not impose any terms on app developers (including those related to pricing) that are unfair, arbitrary, discriminatory, or disproportionate to the services offered to the app developers.
  • Google must be completely forthright with app developers about the services they offer and the associated costs. Google must also make public its payment methodology and eligibility requirements for the charge in a clear and concise manner (s).
  • When it comes to processing payments through UPI in India, Google is obligated to treat all UPI-enabled apps equally, including those that aren't owned by Google.

Google has been ordered by the Commission to stop engaging in anti-competitive behavior, the Competition and Consumer Commission (CCI) said in a statement on Tuesday.

In recent years, Google and Apple have taken a lot of flak from developers throughout the world for demanding that they utilize their billing systems, which has allowed them to earn a lot of money in commission for companies. As a result, Google is considering letting app creators in select areas, such as India, use a different payment method besides Google Play Pay.

The competition regulator fined Google $161.9 million and enacted a number of severe corrective measures last week for anti-competitive behavior involving Android mobile devices.

The regulator was looking into whether Google had abused its dominant position in the smartphone operating system (OS), app store (app store), web search services (search engines), non-OS specific mobile web browsers (browsers), and online video hosting platform (OVH) in India. The government agency found that Google was preeminent in all of the key markets.

The antitrust watchdog stated that Google should not restrict access to its Play Services APIs or other financial or nonfinancial incentives to manufacturers so that they are compelled to preinstall Google's suite of apps. For fear of punishment from Google, Amazon said to the regulator, more than half a dozen hardware vendors had indicated they could not get into a TV manufacturing arrangement with the e-commerce group.

Google released a statement last week calling CCI's order a "significant setback for consumers and businesses," saying it would expose users to "severe security concerns" and increase the "cost of mobile devices for Indians."

On Tuesday, Google announced that its legal team was reviewing the ruling and that it would have no further comment at this time. CCI stated in the order that it had doubts regarding the evidence upon which the regulator had relied to reach its judgment.

In a statement Wednesday, a Google spokesperson said: “Indian developers have benefited from the technology, security, consumer protections, and unrivaled choice and flexibility that Android and Google Play provide. And, by keeping costs low, our model has powered India’s digital transformation and expanded access for hundreds of millions of Indians. We remain committed to our users and developers and are reviewing the decision to evaluate the next steps.”

Source: Reuters, CNN, Nasdaq

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