CCI Initiates an Investigation against Google on Allegations of Abuse of Dominance

On November 9, 2020, CCI initiated an investigation against Alphabet Inc., Google LLC, Google Ireland Limited, Google India Private Limited and Google India Digital Services Private Limited (collectively, ‘Google’). [1]

The informant alleged that Google, through its control over the Play Store and Android Operating System (‘OS’), favoured its Unified Payment Interface (‘UPI’) based payment app, Google Pay, to the disadvantage of: (i) competing apps facilitating payment through UPI; and (ii) users. In particular, Google was: (i) unfairly privileging Google Pay by allowing it prominent placement on the Play Store, Android OS and Android based smartphones, by pre-installing and prominently placing Google Pay on Android smartphones at the time of initial set-up; (ii) mandating apps to use Play Store’s payment system and Google Play In-App Billing for charging their users for purchase of apps on Play Store and in-app purchases (‘IAPs’); and (iii) imposing unfair terms on users by requiring them to use Google Pay in contravention of data localization regulations.

CCI considered the relevant markets to be the: (i) market for licensable mobile OS for smart mobile devices; (ii) market for app stores for Android OS; and (iii) market for apps facilitating payment through UPI. Taking into account, inter alia, the order passed by it in a previous case (Case No. 39 of 2018), CCI observed that Google appeared to be dominant in the first two relevant markets. CCI also observed that the market for apps facilitating payment through UPI was indeed a distinct market and could be differentiated from other forms of payment.

CCI noted the following, with respect to allegations under CA02:

i.      Mandatory use of Play Store’s payment system for paid apps & IAPs restricted the choice available to the app developers to select a payment processing system of their choice, especially since Google charges a commission of 30% (15% in certain cases) for all app purchases and IAPs;

ii.    Google’s conduct of encouraging pre-installation and prominent placement of Google Pay could harm competition in the market for UPI based payment apps, and therefore required further investigation;

iii.  Google’s use of its market position in applications relating to licensable mobile OS, search engine, app store, browser, to enter into contractual arrangements with OEMs for pre-installation of Google Pay, could disturb the level playing field and merited a detailed investigation;

iv.    Allegations regarding search manipulation and bias in favour of Google Pay were unsubstantiated, as the search result screenshots provided by the informant and Google showed different results suggesting that the search ranking on Play Store may be dynamic in nature; and

v.     Allegations regarding Google Pay violating certain data localization norms were not under the jurisdiction of CCI.

Accordingly, CCI passed an order directing the Director General (‘DG’) to initiate an investigation.

CCI also rejected the informant’s request of not allowing Google to cross-examine the informant and observed that the issue of cross-examination of the informant would be decided by the DG. Any refusal by the informant to subject itself to cross-examination would result in the forfeiture of the limited rights of the informant to participate in the proceedings before DG and CCI.

 

[1] Case No. 07 of 2020, order dated November 9, 2020

Published In:Inter Alia Special Edititon - Competition Law - December 2020 [ English
Date: December 18, 2020