India Antitrust Case: Google Payments App Under Investigation

India’s competition authority has initiated a review of Google’s practices concerning its app store, investigating potential misuse of its leading market position to favor its own payment platform within the nation’s substantial digital consumer base.

The Competition Commission of India (CCI) announced on Monday (PDF) the commencement of an antitrust inquiry into Google, focusing on whether the company gives undue prominence to Google Pay during the initial setup of Android smartphones, and whether device manufacturers are given the option to avoid this promotion. The investigation will also examine if the Play Store’s payment processing system creates disadvantages for applications utilizing UPI (Unified Payments Interface) and for users themselves.

The complainant, whose identity remains undisclosed, asserts that the Play Store’s billing mechanisms are structured to benefit Google Pay, and that app developers are required to integrate support for Google Pay if they wish to be available on the Play Store, incurring a substantial commission fee for doing so.

This deeper investigation follows a preliminary assessment by the CCI, which determined that mandating the use of Google Pay for app purchases or in-app transactions constitutes an “imposition of unfair and discriminatory conditions, denial of market access for competing apps of Google Pay and leveraging on the part of Google,” as stated by the regulatory body.

The informant further claimed that Google manipulates Play Store search results to prioritize Google Pay over alternative payment applications—however, the CCI has indicated it lacks sufficient evidence to pursue this specific allegation. The complaint also alleges that Google influences its featured app listings, such as ‘Editor’s Choice Apps’, ‘User Choice Apps’ and ‘Top Free apps’ to favor its own app and manipulates search advertisements on the Play Store to benefit Google Pay.

The CCI noted parallels between Google’s conduct in India and Apple’s practices in Europe, specifically regarding the mandatory use of the platform’s payment system for app distribution and in-app purchases. Similar to Apple, Google reportedly levies a 30% commission on developers utilizing the Play Store’s payment processing and in-app billing services. The watchdog has instructed its director general to conclude the investigation within a 60-day timeframe.

Google communicated to the CCI that Android does not hold a dominant position in India, citing competition from feature phone operating systems and other licensable and non-licensable OSs. The company argues that feature phones currently available in India offer functionality comparable to smartphones.

However, research from Counterpoint indicates that Android powers 99% of smartphones in India. Google also contested other claims, asserting that its service fee of 30% (or 15% in some cases) is justified by market conditions, supports ongoing investment in the Play Store, and covers third-party expenses.

Should the allegations presented by the anonymous informant be substantiated, Google’s actions could be found to violate provisions outlined in Section 4 of India’s Competition Act of 2002.

Google Pay, previously known as Tez, is a leading payment service in India, competing with PhonePe (owned by Walmart), Paytm, and numerous other applications. As of the previous month, PhonePe held a slight lead over Google Pay in the Indian market, with both platforms processing approximately 40% of all transactions on UPI, the country’s widely adopted digital payments infrastructure.

While the Google Play Store accommodates various payment options, including credit cards, mobile wallets, internet banking, and UPI, the informant contends that UPI-based digital payments offer advantages in terms of convenience, security, and cost. The CCI acknowledged this, stating that apps facilitating UPI payments represent a distinct market segment, as users do not typically view them as interchangeable with other digital payment methods.

This antitrust case represents another challenge for Google in India, its largest user base globally. Several startups in the country have recently expressed concerns regarding Android’s dominant position, forming a coalition to address these issues. Following recent objections from these startups, Google delayed the implementation of its revised Play Store billing policy in India until April 2022. It is important to note that the CCI investigation pertains to a complaint filed in February of this year and is separate from these recent events.

In a statement released on Monday, a Google spokesperson informed TechCrunch, “We are encouraged by the CCI’s rejection of several claims made by the anonymous complainant. Regarding the remaining concerns, we are confident that the CCI will recognize that GPay operates within a highly competitive landscape and owes its success to providing consumers with a simple and secure payments experience.”

“Furthermore, the Android platform offers numerous distribution channels for apps; the Play Store is not the sole option. Users select Google Play because we prioritize a safe, secure, and seamless experience. The Play Store’s billing system is integral to maintaining this user expectation and supports our continued investment in the resources necessary for developer success.”

Google is also potentially facing two further antitrust investigations in India concerning its alleged dominance in the smart TV and mobile markets, as reported by Reuters. Additionally, the news agency indicates that Google is currently subject to an antitrust probe in China related to allegations of using its Android OS to suppress competition.

This article has been updated to include additional details, context, and a statement from Google.