Google Found to Unfairly Block Rival Payments on India App Store

Alphabet and Apple have come under pressure from regulators around the world over their payment systems.

By Sankalp Phartiyal, Bloomberg | Updated: 2 April 2022 14:07 IST

Google Found to Unfairly Block Rival Payments on India App Store

Epic Games filed a lawsuit in the US against the Apple and Google

Highlights

Google said it was reducing app makers' fees by 4 percent in South Korea
Google would allow Spotify to use own payment system in its Android app
Google generally took a 30 percent commission on most app store purchases

Google's billing system for app developers is “unfair and discriminatory,” India's antitrust regulator said in the initial findings of an extensive investigation, paving the way for potential penalties in future.

The Competition Commission of India (CCI) found Google discriminated against developers in its Play store billing policy, according to documents seen by Bloomberg News. The findings come after a months-long investigation triggered by protests from developers, who've complained the US internet giant charges an unfairly high fee in return for using Android app stores and its proprietary payments service.

Alphabet, Google's parent, and Apple have come under pressure from regulators around the world who accuse the twin mobile giants of forcing developers to use their payment systems, then taking an outsized cut of revenue. In South Korea, Google was forced to provide an alternative billing system after regulatory action. In that market, Google said it was reducing app makers' fees by 4 percent.

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“Google is imposing unfair and discriminatory conditions in violation” of regulations, the Indian agency said in its preliminary report dated March 14.

“Google's conduct is also resulting in denial of market access to competing UPI apps since the market for UPI enabled digital payment apps is multi-sided, and the network effects will lead to a situation where Google Pay's competitors will be completely excluded from the market in the long run,” it said, referring to the Unified Payments Interface or state-backed payments infrastructure.

The response in India has been strident, underscoring how Google's troubles could undercut future growth. More than 200 startup founders banded together to open discussions with the government to stop it from imposing a fee of as much as 30 percent on smartphone app purchases — its standard levy around the world. While Google delayed implementation of that rule after an outcry in late 2021, the country's tech industry remains determined to constrain the colossus.

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Representatives for the antitrust agency didn't immediately respond to requests for comment. “We will continue to engage with the CCI and demonstrate that our practices benefit Indian consumers and developers, without in any way restricting competition,” Google said in a statement.

The backlash in India echoes global opposition to the fee structure imposed by Google and Apple in their online app stores. Fortnite-maker Epic Games filed a lawsuit in the US against the two companies for how they impose such charges.

India's authorities have proven willing to go after the largest corporations and take forceful action — when they see a clear, national interest. Companies such as Apple were prohibited for years from opening their own retail stores to protect local operators, while TikTok and more than a hundred other Chinese apps were banned over security concerns.

Last month, Alphabet said it will begin letting some apps bill users directly as an alternative to paying through Google, a concession intended to assuage mounting antitrust concerns. The new system, which Google is framing as an experiment, starts with streaming giant Spotify.

Google generally took a 30 percent commission on most app store purchases and subscriptions, but lowered the fee in recent years to 15 percent for media providers like Spotify. Spotify is one of several companies that have complained about the inability to use their own billing systems on mobile app stores.

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