Competition Commission of India (CCI) Orders Probe Against Google
- March 16, 2024
- Posted by: OptimizeIAS Team
- Category: DPN Topics
Competition Commission of India (CCI) Orders Probe Against Google
Subject: Economy
Section: Msc
The Competition Commission of India (CCI) has initiated a probe against Google regarding its User Choice Billing (UCB) system, finding it to be prima facie anticompetitive.
Background:
- The CCI order comes after four entities approached the CCI, alleging that Google’s UCB system is discriminatory, unfair, and disrupts competition in the app markets to favor Google’s own apps.
- Google introduced the UCB system in September 2022, allowing app developers offering digital content to provide alternative billing systems (ABS) alongside the Google Play Billing System (GPBS).
- Under this system, Google alternative billing systems (ABS) alongside the Google Play Billing System (GPBS).
Probe Initiation:
- The CCI’s investigative wing will conduct the probe and submit a report within 60 days.
- The CCI noted that homegrown app developers are aggrieved by Google’s updated payment policies related to its Google Play Store.
Service Fee Concerns:
- According to the CCI order, Google’s service fee for both GPBS and ABS substantially exceeds its cost of providing the services.
- The order suggests that Google is charging app developers 4 to 5 times its cost, which appears disproportionate to the economic value of the services rendered.
- This is viewed as an abuse of dominant position by Google, as per the CCI order.
Recent Actions:
- In early March, Google started delisting various Indian apps from its Play Store for failing to comply with UCB.
- These apps were ‘temporarily’ reinstated after government intervention, pending an appeal by homegrown app developers in the Supreme Court.
- The appeal by local app developers is related to the commission charged by Google for in-app purchases.
- Internet apps approached CCI and alleged that UCB was GPBS in a newer avatar and was in violation of the antitrust body’s earlier order.
Previous CCI Ruling:
- In October 2022, the CCI ruled against Google’s anti-competitive practices concerning its Play Store policies and imposed a penalty of over ₹936 crore.
- Following this ruling, Google allowed third-party billing for in-app purchases.
The CCI’s probe into Google’s UCB system aims to investigate allegations of anticompetitive behavior and unfair practices, particularly concerning the fees charged to app developers. This investigation adds to the ongoing scrutiny of tech giants’ market practices in India.
Google Play Billing System (GPBS):
The Google Play Billing System (GPBS) is the default billing system provided by Google for app developers on the Google Play Store.
When users make purchases within apps (such as for premium features, subscriptions, or digital content), the GPBS handles the transaction process. With GPBS, Google typically charges a service fee to developers for processing these transactions. The fee can range from 10% to 30%, depending on various factors such as the type of transaction and the region.
Alternative Billing Systems (ABS) / User Choice Billing System:
In contrast to the GPBS, alternative billing systems (ABS) offer app developers the option to integrate their own payment systems or third-party payment gateways within their apps. This allows developers to manage transactions directly, bypassing Google’s default billing system, however, under which apps could offer other payment methods such as UPI, credit cards and net banking but this method also attracted a commission rate of 11-26%.
Competition Commission of India
The Competition Commission of India (CCI) is a regulatory body established by the Government of India to enforce the Competition Act, 2002.
Overview:
- Establishment: The CCI was constituted in March 2009 as a statutory body responsible for promoting and sustaining competition in markets, preventing anti-competitive practices, and protecting the interests of consumers.
- Repeal of MRTP Act: It replaced the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act), following the recommendations of the Raghavan Committee.
Composition:
- The Commission is composed of:
- One Chairperson
- Six Members
- These members are appointed by the Central Government.
- The Chairperson and Members are whole-time members of the Commission.
Competition Act, 2002:
- Purpose: The Competition Act, 2002, was enacted to promote competition, prevent anti-competitive practices, and ensure fair trade practices in India.
- Prohibitions:
- Anti-Competitive Agreements: The Act prohibits agreements that significantly affect competition.
- Abuse of Dominant Position: It regulates entities that hold a dominant position in a market to prevent abuse of such position.
- Combinations: The Act regulates mergers, acquisitions, and combinations that may have an adverse impact on competition.
- Establishment of CCI and Competition Appellate Tribunal:
- The Act led to the establishment of the Competition Commission of India (CCI) as the primary regulatory authority.
- It also established the Competition Appellate Tribunal (COMPAT) for hearing appeals against the decisions of the CCI.
- Amendments:
- The Act was amended in 2007 by the Competition (Amendment) Act to further strengthen competition regulations.
- Replacement of COMPAT with NCLAT:
- In 2017, the Government replaced the Competition Appellate Tribunal (COMPAT) with the National Company Law Appellate Tribunal (NCLAT).
The Competition Commission of India plays a crucial role in promoting fair competition, protecting consumer interests, and ensuring a level playing field for businesses operating in India’s markets.