Decoded: Why Google Pay is under Competition Commission's scanner

Experts point out that the Commission has not found any prima facie evidence for three of the six allegations
The Competition Commission of India (CCI) on Monday decided to initiate investigation into whether search engine behemoth Google “unfairly privileged” Google Pay, its UPI-based payments app. This is based on an anonymous complaint, first filed in February this year. Legal experts explain the implications of the move:

What is the basis for the investigation?

The regulator has received complaints against Google on six counts for breaking antitrust rules. However, after initial inquiry, it has decided to pursue investigation on two issues. These relate to “exclusivity regarding the mode of payment for the purchase of apps and in-app purchases” and “pre-installation and prominence of Google Pay on Android smartphones”.

The other four issues raised by the anonymous complaint related to:
  • Excluding other mobile wallets/UPI apps as one of the effective payment options in the Google Play's payment system
  • Prominent placement of Google Pay on the Play Store
  • Search advertisement manipulation on the Play Store
  • Exclusivity requirement imposed by Google resulted in unfair terms being imposed on users
Experts point out that the Commission has not found any prima facie evidence for three of the six allegations. It has said that one of the complaints is to be looked at by the sectoral regulator and is beyond the jurisdiction of the Commission. “The CCI appears to have been prima facie convinced of two of six allegations that merit further investigation,” says Kanika Chaudhary Nayar, partner at law firm L&L Partners. However, if the investigating department unearths any additional incriminating evidence, it has the power to submit those to the Commission in its report, experts add.
Are there any other similar investigations against Google’s payment app in other jurisdictions?

Legal experts say this is the first time that Google Pay is directly being investigated to check whether it is breaking anti-competition rules. Apple’s payment app is currently under the regulatory scanner for similar reasons in the European Union.
This is not the first time that Google has played foul of competition law regulations in India. The CCI had fined Google Rs 136 crore in 2018 for abusing its dominance in search. Nayar feels CCI’s latest order is in line with its previous orders.

Why does this case have larger implications for the start-up ecosystem in India?

Indian start-up community had in October this year protested against Google’s plan to impose its Play Store billing system on developers, as well as pay 30 per cent commission for selling digital goods and services through the system.

Following discussions with different stakeholders, Google decided to put off the rollout of the scheme in India by six months. CCI’s investigation of the exclusivity arrangement regarding the mode of payment for the purchase of apps and in-app purchases has been a long-pending demand of the Indian developer community. In a scathing note, the CCI observed in its order that “the resultant market power being enjoyed by Google due to its grip over Android ecosystem apparently resulted in 'allegedly' high commission fee of 30%. ... Such 'allegedly' high fee would increase the cost of Google's competitors and thus might affect their competitiveness vis-à-vis Google's own verticals.”

Founders of some Indian start-ups have said that they would team up to create an alternative payment app to rival Google Pay.  

What are the other implications of the order and the investigation for Google?

Experts point out that the probe will examine whether Google could access data collected from users of its competitors and use it to its own advantage. However, the Commission in its order rejected the allegation that Google was rigging rankings of the Play Store to display its payment app.

In a statement to the media, Google claimed that its payment app operates in an extremely competitive environment, and owes its success to its ability to offer consumers a simple and secure payments experience. It also claimed that there are numerous distribution channels for apps on the Android platform and that Google Play was not the only app distribution option for Android users.

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