ADIF, a startup policy think tank, has urged CCI to evaluate Google’s user choice billing

Google had previously stated that, in order to comply with CCI’s directives, it would allow app developers to offer an alternate billing system for in-app purchases within India beginning April 26, 2023.

The Alliance of Digital India Foundation (ADIF), a New Delhi policy think tank comprised of prominent Indian internet companies such as Matrimony, Paytm, MapmyIndia, TrulyMadly, and other local entrepreneurs, announced on April 5 that it has requested the CCI (Competition Commission of India) to investigate Google’s user choice billing system “immediately.”

In order to comply with the CCI’s directives, Google announced in February 2023 that it will allow app developers to offer an alternate billing system for in-app purchases within India beginning April 26, 2023.

According to the new policy, if a user pays through the alternative billing system (also known as the User Choice billing system), the transaction will still be subject to a service fee, but at a 4 percent rate reduction.

This effectively means that developers will have to pay a service fee to Google ranging from 6-26 percent for in-app purchases and subscriptions, depending on the type of app/service and the annual revenue it generates on Google Play, as opposed to the current 10-30 percent service fee.

Following the CCI’s antitrust order on Play billing, Google paused enforcement of its in-app billing policy in India in November 2022. The policy is already mandatory for in-app digital content purchases for users outside of India.

In October 2022, CCI directed Google not to prohibit app developers from using third-party billing or payment processing services to purchase apps or for in-app billing on Google Play, in addition to a variety of corrective measures to modify the company’s app payment policies.

It also fined Google Rs 936.44 crore for abusing its dominant position in terms of its Play Store policies.

‘Abusive dominance practise’

ADIF regards Google’s plan to implement the user choice billing system in India as a “abusive dominance practise” by the company.

“Unfortunately, there is no quorum at the CCI; and thus Google is taking advantage of an institutional lacunae, bringing in user choice billing in haste and, in the process, harming the start-up story and also disregarding the CCI order,” the think tank said in a statement.

It also cited a recent instance of Twitter Blue, the social media platform’s subscription service, having different pricing on the web and its mobile app to compensate for the 15-30 percent commission fee charged by Google and Apple on subscriptions.

Twitter Blue is currently available in India for a monthly fee of Rs 650 on the web and Rs 900 on mobile devices. Moneycontrol reported on March 29 that Facebook parent Meta’s paid subscription service Meta Verified is also expected to be available for a monthly fee of Rs 1,099 on the web and Rs 1,499 on the mobile app.

“This would deprive Indian app developers and startups of a large portion of their revenue and would render many young startups’ business models unviable, particularly those that rely on in-app purchases, paid apps, or subscriptions,” it said.

Google, on the other hand, has maintained that the service fee it charges is never solely for payment processing. “It reflects the value provided by Android and Google Play, as well as all of the developer services we offer, including app distribution and discovery, the commerce platform, developer tools, analytics, training, and more,” a Google spokesperson previously told Moneycontrol.

India is one of Google Play’s most important markets in terms of app downloads and users. The country is also emerging as a key monetisation opportunity for Google Play, owing to the country’s rising adoption of digital transactions.

The Android antitrust ruling by the NCLAT

This development comes after the National Company Law Appellate Tribunal (NCLAT) on March 29 set aside four of the ten remedial measures ordered by the CCI in a separate antitrust order pertaining to Google’s Android business.

According to the NCLAT ruling, Google will not be required to allow the hosting of third-party app stores on the Play Store and may continue to restrict the distribution of apps via the sideloading process. The company is also not required to share its proprietary Play Services APIs with competitors, original equipment manufacturers (OEMs), and developers, or to allow users to remove pre-installed apps such as Google Maps, Gmail, and YouTube.

The tribunal, on the other hand, upheld the CCI’s Rs 1,338 crore penalty against Google, stating that the competition watchdog’s order is free of “confirmation bias.”

The tribunal also denied Google interim relief on the Rs 936.44 crore penalty in January 2023. It is scheduled to hear the case on April 17.