Explained: Why Has CCI Slapped Google With ?936.44 Crore Fine

Google was fined Rs.936.44 crore by the Competition Commission of India (CCI) on 25th October. The tech titan was found guilty of abusing its Play Store market position to promote its payments app and in-app payment system. The anti-competitive has ordered the company to stop engaging in unfair business practices.

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It stated that Google should not prohibit app developers from using third-party billing or payment processing services for in-app purchases or app purchases. The CCI issued a statement saying, "The Commission hereby directs Google to cease and desist from indulging in anti-competitive practices."

What is CCI?

The Competition Commission of India (CCI) is India's primary national competition regulator. It is a statutory body within the Ministry of Corporate Affairs that is in charge of enforcing the Competition Act, 2002 in order to promote competition and prevent activities that have a significant adverse effect on competition in India. The CCI investigates cases in which there is a negative impact on competition.

CCI also approves mergers under the act to ensure that two merging entities do not dominate the market.

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The commission was formed on October 14, 2003. It was fully operational in May 2009, with Dhanendra Kumar serving as its first chairman. Ashok Kumar Gupta, the current Chairman of the CCI, was appointed to the position in 2018.

The Competition Act, 2002 goals were to be achieved through the CCI, which was established by the Central Government on October 14, 2003. The Central Government appoints a chairperson and six members to the CCI. It is the commission's responsibility to eliminate anti-competitive practices, promote and sustain competition, protect consumer interests, and ensure free trade in India's markets. The commission is also required to provide an opinion on competition issues in response to a referral from a statutory authority established under any law, as well as to engage in competition advocacy, raise public awareness, and provide competition training.

What is the case?

The CCI issued a cease-and-desist order, directing Google to change its behaviour within a specified time frame. This includes allowing third-party payment services to be used by mobile app developers on its app store.

According to the CCI, Play Store policies require app developers to use Google Play's billing system (GPBS) not only for receiving payments for apps and other digital products, but also for certain in-app purchases. App developers are not permitted to provide users with a direct link to a webpage with an alternative payment method.

In response a Google spokesperson said ¡°Indian developers have benefited from the technology, security, consumer protections, and unrivalled choice and flexibility that Android and Google Play provide¡±. In the statement, Google added: ¡°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¡±, as cited by the Indian Express.

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Why do Google and Apple restrict third-party payment methods?

If users can pay developers through third-party options, Google and Apple will lose revenue from their cut of app store and in-app sales. Now, depending on the type of app and the volume of sales, this revenue share can range from 5% to 15%.

Over the last year or so, some developers on iOS and Android apps have pushed users to get a better deal if they purchase through a third-party link that directs card payment to the developer. However, this is not always preferred, as many users prefer the security of the in-app payment system to visiting a separate link to make a payment. Google and Apple both emphasise that this is precisely why they do not want to offer alternative payment methods.

Second infraction in a month

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This is Google's second fine this month from India's competition watchdog. Previously, the CCI fined Google $162 million, or Rs. 1,337.76 crore, for anticompetitive Android practises. The CCI discovered Google abusing its dominant position in the local smartphone market during an investigation.

After examination, it was found that ¡°Google has perpetuated its dominant position in the online search market resulting in denial of market access for competing search apps in contravention of Section 4(2)(c) of the Act. Google has leveraged its dominant position in Play Store to protect its dominant position in online general search in contravention of Section 4(2)(e) of the Act", as cited by the Mint.