ADIF seeks interim relief from CCI against Google's controversial policy
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 PlayStore 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, the 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.
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