NEW DELHI: The Competition Commission of India (CCI) ordered a detailed investigation against the Internet giant on Monday Google for alleged unfair commercial practices with respect to Google payment as much as Google playpayment system.
Google Pay is a popular digital payments platform, while Google Play is the app store for its Android ecosystem.
“… the Commission is of the prima facie opinion that the Opposing Parties have violated various provisions of Section 4 of the Act … These aspects warrant a detailed investigation,” it said in a 39-page request.
The watchdog ordered a detailed investigation by its Director General (DG), which is the investigative arm, for alleged anti-competitive practices with respect to Google Pay.
Article 4 of the Competition Law refers to the abuse of a dominant position in the market.
The Commission considers prima facie that the market for applications that facilitate payment through the Unified Payment Interface (UPI) appears to be a different relevant market for the assessment of the allegations in this case, according to the order.
According to the regulator, it is “the prima facie opinion that such conduct by Google amounts to the imposition of an unfair and discriminatory condition, the denial of market access for competing applications of Google Pay and the leverage by Google, in terms of different provisions of Section 4 (2) of the Act “.
On the issue of mandatory use of the Google Play payment system for paid applications and in-app purchases (IAP), CCI said it had a “prima facie opinion that the mandatory use of the application store payment system for Paid apps and in-app purchases restricts the option available for app developers to select a payment processing system of their choice, especially considering when Google charges a 30 percent commission (15 percent in certain cases) for all app purchases and IAPs. ”
Considering that Play is the dominant source of app download on the Android operating system (90 percent of downloads) and its condition requires the use of the app store payment system for paid apps and IAPs, it seems that Google controls the significant volume of payments processed in this market, the order said.
“The resulting market power that Google enjoys due to its control over the Android ecosystem apparently resulted in a ‘supposed’ high commission fee of 30 percent.” added.
Indian app developers have raised concerns about Google’s decision to charge a 30 percent commission on paid apps and IAPs. Many of these developers have said that Google cannot force national app developers / owners to sell digital services by using their mandatory billing system.
According to the watchdog, it appears that such a supposedly high fee would increase the cost of Google’s competitors and therefore could affect its competitiveness against Google’s own verticals.
“This app store policy may put your competitors at a disadvantage in downstream markets such as streaming music, e-books / audiobooks, etc. If app developers, in response, increase their subscription fees to offset these costs or eliminate / reduce premium / paid subscription offers for users, may affect user experience, cost, and choice.
“These conditions imposed by application stores limit the ability of application developers to offer payment processing of their choice to users for the purchase of applications, as well as for IAP … the Commission considers prima facie that the imposition of such condition is unfair in terms of Section 4 (2) (a) of the Act, “said the regulator.
Various claims by Google, such as offering a secure system and the need for Play’s billing system, can be properly examined during the investigation, he added.
Google Pay has been integrated with the “flow of intent” methodology, while other UPI applications can be used through the “collection flow” methodology. Both flows involve the user switching from Play to the UPI payment application and vice versa.
“This transition is automated in the intent flow, while users have to do it manually in the collection flow. Based on the above, it appears prima facie that the user experience using Google Pay would be different / better compared to using other apps. based on UPI.
“This difference has the potential to shift users toward adopting Google Pay over other UPI-based payment applications,” CCI said, adding that it is critical to examine whether such a process difference favored Google Pay over others. competitor apps.
Citing various factors, the regulator said it was of the “prima facie opinion that such conduct by Google amounts to the imposition of an unfair and discriminatory condition, denial of market access for competing Google Pay applications, and leverage. by Google, in terms of different provisions of Section 4 (2) of the Act “.
The investigation was ordered against five entities: Alphabet Inc, Google LLC, Google Ireland Ltd, Google India Pvt Ltd and Google India Digital Services Pvt Ltd.
In 2018, CCI had sanctioned Google for anti-competitive practices in the Indian online search market.
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