India fines Google $113 million, compels Play Store to accept third-party payments

It is the second time in as many weeks that India’s antitrust watchdog has fined Google $113 million for abusing the dominant position of its Google Play Store and ordered the company to permit app developers to use third-party payment processing services for in-app purchases or for purchasing apps. India is the world’s largest user of Android devices.

Forcing developers to use Google’s own billing system for paid apps and in-app purchases through Play Store “constitutes an imposition of unfair condition,” according to the Competition Commission of India, which said this violates the country’s Section 4(2)(a)(i) of the Act. The commission began its investigation into Google in late 2020.

The regulator claimed that Google’s refusal to use its billing system for its own apps like YouTube amounts to “imposition of discriminatory conditions.” The regulator interviewed numerous industry players as part of its investigation, including Paytm, Zomato, Info Edge, Samsung, Vivo, Xiaomi, Microsoft, and Realme.

The investigation also came to the conclusion that the mandatory implementation of the Google Play Billing System (GPBS) interferes with the incentives for innovation and the capacity of payment processors and app developers to innovate and engage in technical development, effectively limiting technical development in the market for in-app payment processing services and violating the Act’s provisions. As a result, it is determined that Google has broken the Act’s Section 4(2)(b)(ii) rules.

In contravention of the Act’s provisions in Section 4(2)(c), Google’s mandatory installation of GPBS also prevents payment aggregators and app developers from accessing the market.

By using its dominance in the market for mobile operating systems that can be licenced and app stores for Android OS to defend its position in the downstream markets, Google is violating the requirements of Section 4(2)(e) of the Act.

The Act’s Sections 4(2)(a)(ii), 4(2)(c), and 4(2)(e) are violated by the various integration strategies utilised by Google to integrate its own UPI app compared to other competing UPI apps with the Play Store.

India has the most users among all Google’s markets. Over the past ten years, the corporation has invested billions of dollars in the South Asian market as it has aggressively sought out significant untapped geographic areas to propel its expansion.

The business connects with almost all of India’s 600 million online users. 97% of the local smartphone market is dominated by Android. The UPI network, an infrastructure created by a coalition of banks that has become the most popular means for Indians to conduct online business, has seen the second-largest payment volume using Google Pay, the company’s payment app.

Similar to enabling developers to use a third-party billing system, the antitrust watchdog has ordered Google to make a number of adjustments to its Play Store standards, and compliance is necessary within three months. Google will not impose any anti-steering rules on app developers and won’t stop them from interacting with consumers in any way to advertise their products.