4 days ago, on October 21st, Google was fined 1337 crores for its various monopolistic business practices.
What is monopoly and what are monopolistic practices?
Monopoly: When there is only one major seller of any service or product, and there is no competition, that is called a monopoly. Mono means one. For example, suppose you need textbooks to write a specific exam, and only one company sells these textbooks in India, that is a monopoly. You will have to pay whatever price the company sells the book at.
When such a company takes unfair advantage of its monopoly and creates conditions or rules that make it hard for others to enter the market, that is monopolistic practice. In our example above, suppose that the book publisher goes to the body conducting the exam and gets them to certify their book as the only authorised study material. OR, suppose they go to all the book sellers and give them a 50% profit margin, if they do not stock any other publishers on the same topic. Both these things are examples of monopolistic practices.
What did Google do?
Let’s say A is a developer who publishes an app on the Google play store. He has some in app purchases (things that people can buy while using the app). According to the current policy, A must exclusively and mandatorily use Google Play’s Billing System (GPBS) not only for receiving payments for Apps (and other digital products like audio, video, games) distributed/sold through the Google Play Store but also for certain in-app purchases i.e. purchases made by users of Apps after they have downloaded/ purchased the App from the Play Store.
Further, app developers cannot, within an app, provide users with a direct link to a webpage containing an alternative payment method or use language that encourages a user to purchase the digital item outside of the app (anti-steering provisions).
All developers have to pay Google a service fee for using GPBS.
Google also follows discriminatory policies – because its own app, Youtube, does not use GPBS and therefore, does not have to pay the fees to GPBS.
What does the CCI order state?
- Google shall allow, and not restrict app developers from using any third-party billing/ payment processing services, either for in-app purchases or for purchasing apps. Google shall also not discriminate or otherwise take any adverse measures against such apps using third party billing/ payment processing services, in any manner.
- Google shall not impose any Anti-steering Provisions on app developers and shall not restrict them from communicating with their users to promote their apps and offerings, in any manner.
- Google shall not restrict end users, in any manner, to access and use within apps, the features and services offered by app developers.
- Google shall set out a clear and transparent policy on data that is collected on its platform, use of such data by the platform and also the potential and actual sharing of such data with app developers or other entities, including related entities.
- The competitively relevant transaction/ consumer data of apps generated and acquired through GPBS, shall not be leveraged by Google to further its competitive advantage. Google shall also provide access to the app developer of the data that has been generated through the concerned app, subject to adequate safeguards, as highlighted in this order.
- Google shall not impose any condition (including price related condition) on app developers, which is unfair, unreasonable, discriminatory or disproportionate to the services provided to the app developers.
- Google shall ensure complete transparency in communicating to app developers, services provided, and corresponding fee charged. Google shall also publish in an unambiguous manner the payment policy and criteria for applicability of the fee(s).
- Google shall not discriminate against other apps facilitating payment through UPI in India vis-à-vis its own UPI app, in any manner.
Why is the fine in both cases ‘provisional’?
The Indian branch of Google is not a public limited company. So, its revenue and profit data is not clearly available. Even when the CCI (Competition Commission of India) asked for the details, Google provided data that was unclear and had many inconsistencies.
CCI has asked Google to submit the correct numbers within 30 days.