Davids Take on Goliath

The tech giant has been on a war path with Indian app developers over non-compliance with its billing policies. But the developers allege that the pact with Google violated the Competition Act of 2002

By Nishkarsh Tomar and Ashit Srivastava

The recent case of small start-ups pushing back against tech giant Google’s stringent policies is akin to David taking on Goliath with just a sling and stones. 

According to Play Store’s policy, any app publisher who sells digital content, goods or services to its users must use the app marketplace’s billing system to process those transactions. This policy applies to start-ups that offer services, such as education, gaming, dating, matrimonial and others. This means that if a user makes an in-app purchase from an app downloaded from Play Store, the app developer has to pay the Store a fee ranging between 15% and 30%, which is considered too high. App developers are also charged for listing their apps on Play Store.

This case has gone up to High Courts and even the Supreme Court, all of whom have favoured Google in charging the fee. Recently, in a case between Info Edge (India) Ltd and Google India (P) Ltd, the Madras High Court heard an appeal from several tech companies who challenged a decision made by a single judge. Their main argument was that the Google Play Developer Distribution Agreement (DDA) contained provisions that violated the Competition Act of 2002 and the Payment and Settlement Systems Act of 2007. The DDA allows Google to change the agreement unilaterally and it used this power to change the definition of service under the Google Play’s Billing System (GPBS) and now claims that the price or service fee charged on Play Store is for a whole host of services, which previously referred to “payment processing” only. 

The High Court dismissed the appeal and suggested that the parties should approach the Competition Commission of India as the nature of the dispute falls under its jurisdiction. The plaintiffs, Matrimony and People Interactive Private Limited, had approached the Commission before, so it was not unfamiliar to them. People Interactive Pvt. Ltd filed a complaint before the Competition Commission of India on October 18, 2022, after the new policy was announced on June 2, 2022. They requested an interim injunction to maintain the status quo and not to collect or impose commission/services on in-app purchases of digital goods, including through User Choice Billing, and for IAP and paid app downloads, which are processed through alternative payment solutions.

The parties are bound by the order, and any further terms executed must be tested by the Competition Commission of India. The Court provided a minor potion to remedy the situation by extending the interim order, which was already in operation, for three weeks.

Then on March 1, 2024, Google launched a relentless blitz, leaving a trail of devastation and delisting more than 100 Indian apps, such as Alt Balaji, naukri.com, shaadi.com, 99acres, Bharat Matrimony, Telugu Matrimony, Tamil Matrimony, and Marathi Matrimony from the Play Store due to non-compliance with the billing policies. Google has accused several apps of not following its billing policies by offering their own payment gateways and avoiding payment fees for the past three years. 

This move by Google led to criticism from Indian companies, which have been at odds with the tech giant for a long time. In response, Google has decided to temporarily reinstate the apps, but has frozen their in-app payment options. This decision was made following a closed-door meeting between Google India head Sanjay Gupta and IT minister Ashwini Vaishnaw, who has assured the companies that he will take up their cause, stating that big tech companies cannot decide the fate of Indian start-ups. The Indian companies have also appealed to CCI to intervene and ask Google to allow them to use other payment methods.

In light of these events, Info Edge’s Sanjeev Bikhchandani has suggested that India should have its own App Store. He is joined by many tech founders and tech pundits in exhorting the government to do so. PhonePe recently launched its own Indus Appstore. In the face of Google’s towering dominance, the government maintains its own app store. However, in thisAndroid-dominated realm, where Google’s platform offers a fortress of security features, it reigns as the undisputed giant.

Presently, Google offers three billing options, according to its payment policies. These options include operating on a consumption-only basis without a service fee, integrating Google Play’s billing system, or offering an alternative billing system alongside Google Play’s for users in India. Most users in India prefer alternative billing options like Paytm, UPI and Razorpay. In fact, many tech companies favour non-Google payment options for in-app purchases as they don’t have to pay Google any commission on these transactions. 

Ingenious starts-up feel more active and associated on this front, especially knowing that the Indian government has been helpful to them. However, this does not deviate from the fact that harmony has to be achieved; larger corporations will surely play a role in India’s economic and diplomatic policy. However, a harmonious solution has to be found within India’s goal of Atmanirbhar Bharat.

Interestingly, this is not the first instance when such matters have come to the fore and questions of a level-playing field have been invoked time and again. As the Indian economy is primarily dependent on MSMEs, a smaller start-up might not be in a position to tackle the towering dominance of large corporations. So, what might seem like a standard practice for a large corporation, can have devastating impact on small market players. 

Though there is no absence of regulatory framework for ensuring a level-playing field, questions of technology and law have gone beyond the realm of native laws and primarily turned into those of policy, and to be more specific, of geopolitics policy. As technology development has millions of dollars of investment, tech giants are rarely ready to budge on these issues. But if the native technology market, especially in South-Asia, needs to be geared up, some strong government bargaining has to take place.                   

In the meantime, to escape Google’s exorbitant rates, some companies have switched transactions to their websites from in-app purchases. The case will be heard by the Supreme Court on March 19, 2024. Delayed justice will give Google more time to eat from the profits of Indian start-ups. 

—Nishkarsh Tomar is a student of Dharmashastra National Law University, Jabalpur, while Ashit Srivastava is an assistant professor there

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