Big Tech under the scanner in India after South Korea slaps fine on Google

Topics big tech | Google | CCI

After the South Korean antitrust regulator fined Google $177 million for using its dominant position in the mobile operating system (OS) segment to engage in anti-competitive trade practices, the tech giant will now be scrutinised in India. The Competition Commission of India’s investigative arm has in a report accused Google of anti-competitive and restrictive trade practices across its product categories. The potential CCI probe and the recent ruling against Google by South Korea has given Indian developers and startups — who have for years been complaining about the arbitr.....
After the South Korean antitrust regulator fined Google $177 million for using its dominant position in the mobile operating system (OS) segment to engage in anti-competitive trade practices, the tech giant will now be scrutinised in India. The Competition Commission of India’s investigative arm has in a report accused Google of anti-competitive and restrictive trade practices across its product categories.

The potential CCI probe and the recent ruling against Google by South Korea has given Indian developers and startups — who have for years been complaining about the arbitrary nature of Google’s Play Store business model — a shot in the arm.

“This will count as one of the first major steps by Indian regulators to reign in the might of Google. The findings of the probe are a scathing indictment of Google’s anti-competitive practices and continued abuse of its dominant position,” says Sijo Kuruvilla George, executive director, Alliance of Digital India Foundation (ADIF). 

In a response to Business Standard on the findings being presented to CCI, a Google spokesperson said: “Android has enabled millions of Indians to connect to the internet by making mobile devices more affordable. We look forward to working with the Competition Commission of India to demonstrate how Android has led to more competition and innovation, not less.”

With a rising number of smartphone users in India, lower bandwidth and a thriving digital payment ecosystem, many are questioning if Big Tech players such as Google, Facebook, Apple and others should have a monopolistic play.

The reason why the startup and developer communities are joining hands is Google’s announcement last year that it would charge a 30 per cent commission on in-app purchases, and that developers will have to use only Google’s payment gateway. This matters because Google’s Android is the dominant OS in India, with almost 90 per cent of the smartphone market on Android. Android is also a dominant player in the SmartTV segment, while Google’s Chrome has a majority share of the browser segment.

Many apps have in fact been asked to leave the Play Store with little reason or short prior notice, and with little room for dialogue. Many worry that apart from the commission, there is no guarantee that Google won’t show them the door on the pretext of non-compliance. Developers complain that this amounts to high-handed treatment.

Moreover, Google and Apple do not provide app developers any special service after they have paid the commission. Amazon and Flipkart are exempt from paying commission, since they sell tangible goods. But dating apps, education apps and the OTT platform are not similarly exempt, say industry experts.

Kuruvilla adds that given the importance of the mobile ecosystem, it is crucial for developers to have more clarity and reliability on some of these issues. ADIF was set up last year to create dialogue between the government and the regulatory and developer ecosystem. Kuruvilla also says that ADIF will soon approach the Ministry of Electronics and Information Technology. 

The app that attracted the maximum publicity because of its removal from Play Store was Paytm (in 2020), the reason cited being that it violated the store’s policy on sport betting activities. Though it was reinstated later that day, the move turned the spotlight on many issues, the most important of which was Google’s hold on the digital ecosystem. MobiKwik, the digital payment wallet, was taken down as well.

Or, take the example of the gaming platform WinZo. By 2017, it had garnered 5 million users and 50,000 reviews on Google’s app store. It was a 4.8 star-rated app, until one day Google decided to remove it from the Play Store. The most striking part of this move was its abruptness. WinZo then created a platform play for gaming developers and built an alternative distribution channel parallel to Play Store.

Says WinZo co-founder Saumya Singh Rathore, recalling the day it happened: “When we pointed out that there were several others who were doing the same thing, they were not ready to hear us. This propelled us to rethink our entire strategy.” WinZo now has 77 games and is working to add 100 more games. It has a registered user base of 60 million, with an active user base of 20 million per month, and clocks $2 billion in micro-transactions per month.

Snehil Khanor, co-founder of dating app TrulyMadly and a member of ADIF’s executive council, believes that the gatekeeper role that Google is taking by mandating its payment gateway as the only way for transactions will stifle innovation.

“First, this move of Google, or for that matter Apple, goes against Section 4 of the CCI Act. Two, by March 2022, we are being asked to remove all other payment gateways being used on our app. We are then being charged 30 per cent for the same service that others are charging 2 per cent for. And we receive money once a month, impacting cash flow and taking away from the profit margin,” he notes.

Other than commissions, the two tech majors also charge a fee  — Apple $100 a year, Google a one-time fee of $25 — for listing on their app stores. Though the CCI panel’s report has just been filed, it is a signal to Big Tech that in India their business models are being closely scrutinised.


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