CCI orders investigation into Google’s alleged abuse in mobile payment domain with GPay

CCI’s investigation will carefully examine two of several accusations filed by an unnamed informant related to prominence and pre-installation of GPay on Android devices and exclusive use of GPay for in-app purchases and buying other apps

India’s competition regulator body, the Competition Commission of India (CCI), has finally agreed to an investigation under section 4 of the competition act into a couple of allegations against Google for its abuse of dominance. A couple of months ago, when Paytm was removed by Google on its Play Store for a few hours, experts and users felt that this issue could lead to a severe anti-trust scuffle. But, now the search engine giant is itself charged with abusing its position in the UPI payments market.

Back in February, the complainant had filed several allegations that include prominence and pre-installation of Google Pay on Android phones and the exclusive use of GPay for in-app purchases and buying apps. The complaint suggests that Google has illegally controlled the Android OS and Play Store, as well as shows and favours GPay over other payment apps. This leads to unfair treatment of other companies and also abuse of dominant position. With this complaint, the informant wanted to say that app developers cannot use other payment platforms such as PhonePe, Paytm, BHIM that charge a much lower commission, whereas the charge for Google’s commission is 30%.

Google responded to it by saying, “It enables us to settle third party fees associated with the purchase (e.g., carrier fees for direct carrier billing, credit card fees, etc.), and sustain its significant investments in Play.”

The company has also been accused of restricting OEMs or device manufacturers from opting for alternate versions of Android OS. According to India’s competition law, this abuse of position on device makers seemed to amount to an imposition of “unfair conditions”, claims CCI. Google faced the similar situation in Europe, where regulators imposed a fine of $5 billion for asking OEMs to pre-install its apps on Android devices. But, the search engine giant has challenged the appeal.

The complaint letter of the informant reads, “Google is imposing a “take it or leave it” condition on all app providers. If apps do not comply with Google’s demand of using Play Store’s payment system and Google Play’s In-App billing, they will not be able to access more than 90% of the target users in India, which is not a feasible option for any app provider.”

In its order, the CCI said “By making pre-installation of Google’s proprietary apps conditional, Google reduced the ability and incentive of device manufacturers to develop and sell devices operated on alternate versions of Android. It amounts to prima facie leveraging of Google’s dominance.”

When Google was requested to comment on the subject, it referred to its previous statement published by Reuters. It clarified in the statement that Android had helped millions of Indians to connect and use the internet by coming out with cheaper mobile devices. At the same time, Google said they are looking forward to cooperating with CCI to explain and help them analyse how Android has led to more innovation and competition.

Regarding the GPay controversy, the complaint has argued that the billing system of Google Play Store favours Google Pay app and if any apps want to be listed on the Play Store they are needed to pay a high commission. The unidentified informant also argued that Google deliberately skews its search results on the Play Store in favour of its apps over competing apps. But, CCI refrained itself from investigating this claim as there is a lack of proper evidence. Google puts its feature app on the Play Store with a title such as ‘Editor’s Choice Apps’, ‘User Choice Apps’ and ‘Top Free apps’.

CCI also stated that this is the second anti-trust investigation against Google. The competition regulator body in 2018 declared Google guilty of the violation of competition laws and abuse of position in the web search advertising services and the online general web search.

During the probe, CCI said that Google follows the law by giving all OEM partners the option to enter into a revenue-sharing agreement. The regulator body also added that the position of Google in the market with various streams of the smartphone ecosystem cannot be discounted in the relationship with OEMs.

“It is apparent that the market position of Google in several gateway products for web-based services makes it, an indispensable partner in the smart mobile device ecosystem and such position also appears to place Google in a unique advantage compared to other UPI app developers.”

An anonymous Google India spokesperson responded to the media queries and stated they are confident about Google’s fair treatment and honesty and it operates in a highly competitive environment, while also offering a secure and protected payments experience to the users.

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