Key points:
- CCI to investigate Google into two various allegations.
- The complaint alleges that Google, through its control over the Play Store and the Android operating system (OS), favours Google Pay over competing apps.
- the commission had rejected several claims made by the anonymous complainant.
Competition Commission of India (CCI) has ordered an investigation on tech giant Google into allegations of abuse of dominance.
The investigation will look into two of various allegations made in a complaint filed in February by an unnamed informant related to exclusive use of Google Pay (GPay) for buying apps and in-app purchases (IAPs) via the Play Store and pre-installation and fame of Google Pay on Android smartphones.
The complaint alleges that Google, through its control over the Play Store and the Android operating system (OS), favours Google Pay over competing apps. This amounts to abuse of its dominant position by Google, the complaint said.
“Based on the information available on the record, (the commission) is prima facie convinced that a case is made out against Google for directing an investigation by the DG (director general),” the CCI said. The DG has to complete the investigation and submit a report within 60 days.
According to Kanika Chaudhary Nayar, partner at law firm Luthra and Luthra, the order came along expected lines from earlier prima facie findings of the CCI of abuse of dominance by Google in the market for licensable operating system (OS) for smartphones and the app store for Android OS.
Nayarsaid,“The order is on expected lines. The commission wanted to investigate only two of the six counts that the informant has alleged because three allegations are lacking in evidence and one is outside the CCI’s regulatory framework.”
Google said the commission had rejected several claims made by the anonymous complainant.
“On the remaining concerns, first, we are confident that the CCI will find that GPay operates in an extremely competitive environment, and owes its success to its ability to offer consumers a simple and secure payments experience,” it said in an email.
The company said numerous distribution channels exist for apps on the Android platform and that Play is not the only option for the OS.
“Users choose Google Play because we ensure a safe, secure, and seamless experience,” the company said. “Play’s billing system is a fundamental part of meeting this user expectation and helps ensure our continued investment in the many important things needed to make developers successful.”
The firm also faces antitrust proceedings in the US for its alleged abuse of dominance in the search and search advertising market, along with the European Commission flagging concerns against its mandatory payment system in the Play Store while investigating a similar complaint against Apple.
The “mandatory use of application store’s payment system for paid apps and in-app purchases restricts the choice available to the app developers to select a payment processing system of their choice,” CCI said.
On preferential treatment for Google Pay, the commission said the “conduct of Google amounts to imposition of unfair and discriminatory conditions, denial of market access for competing apps of Google Pay and leveraging on the part of Google.”
The condition that only Google Pay can be used in the Play Store gave it control over significant payment volume, which in turn was being leveraged to impose an “allegedly” high commission fee of 30% on all such payments (15% in certain cases), the commission said. Such a fee would put developers at a disadvantage as raising their prices to offset these costs could affect user experience and choice, the CCI said.
“Moreover, it also needs to be seen whether Google would have access to data collected from the users of its downstream competitors which would enable it to improve its own services,” the CCI said. Google’s submission that it offered a secured system could be examined during the investigation, it said.
Google said it doesn’t favour the GPay app in the Play Store’s search rankings. It does not grant unmerited prominence to GPay or manipulate advertisements on the Play Store. GPay is not preinstalled on all Android devices and is not the default payment app, it said.
It is also not an exclusive payment method on the Play Store and the fee levied is not arbitrary.
Google recently postponed its decision to apply a 30% fee across the Play Store after the move led to a backlash from Indian app developers.
According to the CCI informant, the pre-installation of Google’s payment app would drive the users to exclusively use Google Pay instead of looking for alternatives due to a “status quo bias.”
“In such a stage of evolution, Google using its market position in applications relating to licensable mobile OS, search engine, app store, browser, etc. to enter into contractual arrangements with OEMs for preinstallation of GPay, may disturb the level playing field,” the CCI said.
A legal expert said the order appeared to be in line with a recent move by the National Payments Corporation of India (NPCI).
“If we look at the NPCI’s recent move to put a cap on the market share, it is also intended to limit abuse of dominance and so it indicates that CCI and other regulators
are looking at these issues seriously,” said NS Nappinai, Supreme Court advocate and founder, Cyber Saathi. “Google is a behemoth which has multiple verticals and trying to promote one product through another, at the cost of competition, assuming it is so, will certainly be considered as abuse of power.”
