India slaps another penalty of over Rs 936cr on Google

The Competition Commission of India (CCI), India's fair trade regulator, today announced that it is imposing yet another penalty of Rs 936.44 crore on Google, the second time in a week, for allegedly misusing its dominant position about Play Store policy and ordered the tech giant to stop engaging in unfair commercial practices.

This took the monetary fine imposed on Google to a total Rs 2,274 core, reports our New Delhi correspondent.

The US tech firm was found guilty of abusing its market position to promote its payments app and in-app payment system in an antitrust probe this month, according to the CCI today (October 25, 2022).

For app developers, app stores have become a necessary medium for distribution of their apps to the end users and the availability of app store(s) is directly dependent on OS installed on a smart device, the CCI said in a statement.

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"An appreciation of the market dynamics in licensable mobile operating system in India makes it evident that Google's Android OS has successfully reaped the indirect network effects. Google's Play Store constitutes the main distribution channel for app developers in the Android mobile ecosystem, which allows its owners to capitalise on the apps brought to market," said the CCI statement.

"Based on its assessment, the CCI found Google to be dominant in the markets for licensable OS for smart mobile devices and market for app stores for Android smart mobile OS, in India," it added.

It said Google's Play Store policies require the App developers to exclusively and mandatorily use Google Play's Billing System (GPBS) not only for receiving payments for Apps (and other digital products like audio, video, games) distributed/sold through the Google Play Store but also for certain in-app purchases made by users of Apps after they have downloaded/ purchased the App from the Play Store.

"If the app developers do not comply with Google's policy of using GPBS, they are not permitted to list their apps on the Play Store and thus, would lose out the vast pool of potential customers in the form of Android users," the CCI said.

"Making access to the Play Store dependent on mandatory usage of GPBS for paid apps and in-app purchases is one sided and arbitrary and devoid of any legitimate business interest. The app developers are left bereft of the inherent choice to use payment processor of their liking from the open market," the Indian fair-trade regulator said.

"Based on its assessment, the CCI concluded that making access to the Play Store, for app developers, dependent on mandatory usage of GPBS for paid apps and in-app purchases constitutes an imposition of unfair condition on app developers. Thus, Google is found to be in violation of the provisions of Section 4(2)(a)(i) of the Act," according to the statement.

"Google is found to be following discriminatory practices by not using GPBS for its own applications i.e., YouTube. This also amount to imposition of discriminatory conditions as well as pricing as YouTube is not paying the service fee as being imposed on other apps covered in the GPBS requirements. Thus, Google is found to be in violation of Section 4(2)(a)(i) and 4(2)(a)(ii) of the Act."

The practices followed by Google results in leveraging its dominance in market for licensable mobile OS and app stores for Android OS, to protect its position in the downstream markets, the statement added.