CCI Imposes INR 936 Crore Penalty On Google: Report

Google has been fined Rs 936.44 crore by the Competition Commission of India (CCI) on Tuesday for "abusing" its dominant position with respect to its Play Store policy. This is the second such fine the internet behemoth has received in a week.

What CCI says

“For app developers, app stores have become a necessary medium for distribution of their apps to the end users and the availability of app store is directly dependent on OS installed on a smart device. An appreciation of the market dynamics in licensable mobile operating systems in India makes it evident that Google’s Android OS has successfully reaped the indirect network effects. Google’s Play Store constitutes the main distribution channel for app developers in the Android mobile ecosystem, which allows its owners to capitalise on the apps brought to market.” 

According to the analysis, CCI has concluded that Google dominated the Indian markets for app stores for Android smart mobile OS and licensable OS for smart mobile devices.

“Google’s Play Store policies require the App developers to exclusively and mandatorily use Google Play's Billing System (GPBS) not only for receiving payments for Apps (and other digital products like audio, video, games) distributed/sold through the Google Play Store but also for certain in-app purchases i.e. purchases made by users of Apps after they have downloaded/ purchased the App from the Play Store. Further, app developers cannot, within an app, provide users with a direct link to a webpage containing an alternative payment method or use language that encourages a user to purchase the digital item outside of the app (anti-steering provisions). If the app developers do not comply with Google’s policy of using GPBS, they are not permitted to list their apps on the Play Store and thus, would lose out on the vast pool of potential customers in the form of Android users. Making access to the Play Store dependent on mandatory usage of GPBS for paid apps and in-app purchases is one-sided and arbitrary and devoid of any legitimate business interest. The app developers are left bereft of the inherent choice to use payment processors of their liking from the open market,” mentions the regulator.

Customer awareness of Google's intent flow model has increased

Google Pay has been integrated with the intent flow methodology, while other UPI apps can be utilised with the collect flow technique, according to CCI. It has been stated that intent flow technology is more advanced and user-friendly than collect flow technology, bringing considerable benefits to both customers and merchants. It has also been highlighted that success rates for the intent flow approach were greater due to lower latency. The CCI has been notified by Google that it recently revised its rules and now permits competing UPI apps to be connected with the intent flow.

“In relation to the computation of penalty, the CCI has noted that there were glaring inconsistencies and wide disclaimers in presenting various revenue data points by Google. However, in the interest of justice and with the intent of ensuring necessary market correction at the earliest, the CCI quantified the provisional monetary penalties based on the data presented by Google,” writes CCI in the Press release. 

Past setbacks

Earlier on Thursday, CCI has been penalised the search engine giant Rs 1338 crore for engaging in anti-competitive behaviour with regard to its Android operating system and demanded that it alter its strategy for its Android platforms. This occurred a few weeks after CCI ordered an investigation in a case similar to this one, in which News Broadcasters and Digital Associations (NBDA) accused Google's parent companies Alphabet Inc, Google LLC, Google India, Google Ireland and Google Asia Pacific of dictating terms and conditions that were unfair to content creators connected to news organisations and in favour of themselves.