Google Ordered by CCI to Allow Third-Party Payments, Adopt 8 Remedies in 3 Months

The Competition Commission of India (CCI) said Google used its "dominant position" to force app developers to use its in-app payment system.

By Reuters | Updated: 26 October 2022 10:46 IST

Google Ordered by CCI to Allow Third-Party Payments, Adopt 8 Remedies in 3 Months

Photo Credit: Bloomberg

Google charges commissions of up to 30 percent on purchases made within an app

Highlights

Google facing separate probe into its conduct in Indian smart TV market
Google has faced criticism globally, including in South Korea
Google's Android powers 97 percent of India's 600 million smartphones

Alphabet's Google should not restrict app developers from using third-party billing or payment processing services in India, the country's antitrust body said on Tuesday, as it fined the US giant $113 (roughly Rs. 932 crore) million for anti-competitive practices.

The Competition Commission of India (CCI) said Google used its "dominant position" to force app developers to use its in-app payment system, noting the sale of in-app digital goods is a key means for developers to monetize their work.

The CCI's move is the latest setback for Google in one of its priority markets, where it was fined another $162 million (roughly Rs. 1,336 crore) by the watchdog on Thursday for anti-competitive practices related to its Android operating system, and was asked to change its approach to its Android platform.

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The US giant can appeal the orders in an Indian tribunal.

Other than the fine, Google was asked to adopt 8 remedies or operations adjustments within three months, including not restricting "app developers from using any third-party billing/ payment processing services, either for in-app purchases or for purchasing apps," the 199-page CCI order said.

Google should ensure complete transparency in communicating with app developers and details about service fees charged, the CCI order added.

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The order would come as a major relief for Indian startups and smaller companies that have long objected to Google's policy of mandatorily imposing the use of its own payments system on app developers.

The investigation into Google's payment ecosystem was started in 2020, after an antitrust case was filed against Google. The watchdog kept the identity of the complainant confidential on his request.

Naval Chopra, an antitrust partner at India's Shardul Amarchand law firm which represented that complainant, told Reuters Tuesday that CCI's order will help ensure healthy competition and reduce costs for app developers.

"The CCI order directing Google to allow alternate payment processing systems will remove the artificial barrier that Google had erected," Chopra said, declining to disclose the name of the complainant for whom he had filed the case.

The search engine giant is also facing a separate probe into its business conduct in the Indian smart TV market.

It had called CCI's Thursday move "a major setback for Indian consumers and businesses", adding it will review the order and decide next steps.

Google has faced criticism globally, including in South Korea, for mandating software developers using its app store to use a proprietary in-app payment system that charges commissions of up to 30 percent on purchases made within an app. Of late, Google has begun to allow alternative payment systems in more countries.

Google's Android operating system powers 97 percent of India's 600 million smartphones, according to Counterpoint Research.

"Indian developers have benefited from the technology, security, consumer protections, and unrivaled choice and flexibility that Android and Google Play provide. And, by keeping costs low, our model has powered India's digital transformation and expanded access for hundreds of millions of Indians. We remain committed to our users and developers and are reviewing the decision to evaluate the next steps," a Google spokesperson said in a prepared statement.

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