Google comes under CCI lens again; regulator orders probe into payments system, Google Pay

Competition Commission of India (CCI) on Monday ordered a detailed probe against internet giant Google for alleged unfair business practices with respect to Google Pay as well as Google Play's payment system.

Google Pay is a popular digital payments platform while Google Play is app store on its Android ecosystem.

"... Commission is of prima facie view that Opposite Parties have contravened various provisions of Section 4 of Act... se aspects warrant a detailed investigation," it said in a 39-p order.

watchdog has ordered a detailed probe by its Director General (DG), which is investigation arm, for alleged anti-competitive practices with respect to Google Pay.

Section 4 of Competition Act pertains to abuse of dominant market position.

Commission is of prima facie view that market for apps facilitating payment through Unified Payments Interface (UPI) appears to be a distinct relevant market for assessment of allegations in present matter, order said.

According to regulator, it is of " prima facie view that said conduct of Google amounts to imposition of unfair and discriminatory condition, denial of market access for competing apps of Google Pay and leveraging on part of Google, in terms of different provisions of Section 4(2) of Act." On issue of mandatory use of Google Play's payment system for paid apps and in-app purchases (IAPs), CCI said it was of "prima facie view that mandatory use of application store's payment system for paid apps & in-app purchases restricts choice available to app developers to select a payment processing system of ir choice especially considering when Google charges a commission of 30 per cent (15 per cent in certain cases) for all app purchases and IAPs." Considering that Play is dominant source of downloading apps in Android OS (90 per cent of downloads) and its condition requiring use of application store's payment system for paid apps and IAPs, it appears that Google controls significant volume of payments processed in this market, order said.

" resultant market power being enjoyed by Google due to its grip over Android ecosystem apparently resulted in 'allegedly' high commission fee of 30 per cent." it added.

Indian app developers have been voicing concerns over Google's move to charge 30 per cent commission on paid apps and IAPs. Many such developers have said that Google cant force domestic app developers/ owners to sell digital services by compulsory use of its billing system.

According to watchdog, it appears that such allegedly high fee would increase cost of Google's competitors and thus might affect ir competitiveness vis-s-vis Google's own verticals.

"Such a policy of application store may disadvant its competitors in downstream markets, such as music streaming, e-books/ audiobooks etc. If application developers, in response, raise ir subscription fees to offset se costs or remove/ reduce premium/ paid subscription offers for users, it may affect user experience, cost and choice.

"Such conditions imposed by app stores limit ability of app developers to offer payment processing of ir choice to users for app purchases as well as IAPs... Commission is of prima facie view that imposition of such condition is unfair in terms of Section 4(2)(a) of Act," regulator said.

Various pleas of Google like offering a secured system and necessity of Play's billing system can be appropriately examined during investigation, it added.

Google Pay has been integrated with 'intent flow' methodology whereas or UPI apps can be used through 'collect flow' methodology. Both flows involve user transitioning from Play to UPI payment app and back again.

"This transition is automated in intent flow, whereas same is required to be manually undertaken by users in collect flow. Based on above, prima facie it appears that user experience while using Google Pay would be different/ better as compared to using or UPI based apps.

"This difference has potential to shift users towards adopting Google Pay over or UPI based payment apps," CCI said, adding that it becomes critical to examine wher such difference in process favoured Google Pay to disadvant of or competing apps.

Citing various factors, regulator said it was of "prima facie view that said conduct of Google amounts to imposition of unfair and discriminatory condition, denial of market access for competing apps of Google Pay and leveraging on part of Google, in terms of different provisions of Section 4(2) of Act".

probe has been 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 penalised Google for anti-competitive practices in Indian market for online search.