Startups accuse Google of excess fees on Play Store
1 min read 03 Mar 2023, 10:25 PM ISTNew Delhi: Indian startups and developers are weighing options against Google including legal action for what they say excess fees imposed by the Android maker for selling digital items via the Play Store
PremiumNew Delhi: Indian startups and developers are weighing options against Google including legal action for what they say excess fees imposed by the Android maker for selling digital items via the Play Store.
Google, on 24 February, opened its alternative billing policy to all developers in India. This allows firms selling digital items and subscriptions through the Play Store to integrate billing methods other than Google’s built- in systems.
However, startups are crying foul, accusing the company of overcharging for these payments. Google charges 15% for using its own billing systems for any payments on apps earning less than $1 million in revenue annually. For others, the fee is 30%. Under the new policy, if users choose third-party billing, app developers still have to pay 11% and 26%, respectively.
Startup founders and industry stakeholders met on 27 February to discuss the way forward. Two founders, who were part of the discussions, said requesting anonymity that they are exploring all legal avenues, which include filing another complaint with the Competition Commission of India (CCI), going to courts, and approaching the government. The startups are accusing Google of discriminatory pricing, which they said affects market competition. One of the founders said they are planning to file a case of contempt with the CCI, claiming that Google’s new policy violates the CCI order.
To be sure, Google updated its Play Store policy in January to comply with another CCI order, which found the US tech firm in violation of India’s competition laws. The CCI slapped Google with a ₹936 crore fine last October, and ordered it to allow third-party billing on Play Store.
Though third-party billing is now available to all developers, since last month, startups feel that Google is still charging high commissions on third-party billing.
“Google Play’s service fee has never been simply a fee for payment processing, and even when a user chooses an alternative billing system, developers receive significant value from Google Play and Android," a Google spokesperson said in a statement.
“Google Play’s service fee supports our investment in these platforms—including enabling us to distribute Android for free and provide the suite of tools and services that help developers build successful businesses, all while keeping our platforms safe and secure for billions of users worldwide," the spokesperson said.
However, Suvigya Awasthy, associate partner at PSL Advocates and Solicitors said, “Many stakeholders including startups are not appeased by this move and are mulling legal action against Google as they feel the charging of service fees is not justified and leads to discrimination".
The second startup founder cited above said app makers are required to pay 2-3% commissions to the third-party payment methods used by them. Adding Google’s commission means that the overall commission they would be required to pay would remain more or less the same as before. “The CCI rule clearly said that no discriminatory, disproportionate, or unfair conditions should be imposed on developers," the founder claimed.
The CCI in its ruling, in October, said Google shall not impose any condition (including price-related conditions) on app developers, which is unfair, unreasonable, discriminatory, or disproportionate to the services provided to the app developer.
Furthermore, antitrust lawyers said that the startups’ case may have merit too, and they can challenge Google’s decision to still charge commission on third-party billing if they can establish that it amounts to antitrust.
“It is possible to spin a pricing issue into an antitrust issue. There are several pricing issues that come within the realm of competition law. If startups can establish that it is genuinely an antitrust issue that has an appreciable adverse impact on competition, the CCI has the power to take up the issue and take consequential action," said Samudra Sarangi, a Partner at the Law Offices of Panag & Babu.
Sarangi added that if legal remedies available with CCI are exhausted, the startups can approach other courts.
Ankur Mahindro, Managing Partner, Kred Jure - Advocates & Legal Consultants, said Google’s decision to decrease the service charge by only 4% “is a blatant violation" of Para 395.1 and 395.6 of the CCI’s order. He added that section 42 of the Competition Act 2002 prescribes that for any violation of orders under Section 27 of the Act, a penalty of ₹1 Lakh per day can be imposed subject to a maximum of ₹10 crore.
Startups can also appeal to the National Company Law Appellate Tribunal (NCLAT), he added.
“A fresh complaint may also be filed citing anti-competitive practices challenging the rates as other payment services charge anywhere between 1 to 3% commission on transactions and Google’s policy change may seem like an empty formality," said Awasthy.
Google is also appearing in front of the NCLAT on an appeal it filed against another CCI order where it was fined ₹1337.6 crore for violating competition laws with the terms of its Android license.
