Google faces investigation for allegedly abusing dominant position through app payment exclusivity and Google Pay pre-installation under Section 4

XYZ Versus Alphabet Inc. and Ors.

XYZ Versus Alphabet Inc. and Ors. - TMI Issues Involved:
1. Locus of the Informant
2. Relevant Market and Dominance of Google
3. Allegations under Section 4: Abuse of Dominant Position
4. Exclusivity Regarding Mode of Payment for Purchase of Apps and In-App Purchases (IAPS)
5. Pre-installation and Prominence of Google Pay on Android Smartphones
6. Search Manipulation and Bias by Google in favour of Google Pay
7. Prominent Placement of Google Pay on the Play Store
8. Search Advertisement Manipulation on the Play Store
9. Exclusivity Requirement Imposed by Google Resulted in Unfair Terms Being Imposed on Users

Detailed Analysis:

1. Locus of the Informant
The Commission addressed the procedural objection raised by the Opposite Parties regarding the locus of the Informant to file the Information. The Opposite Parties cited the NCLAT decision in Samir Agarwal v. Competition Commission of India, arguing that only a person who has suffered an invasion of legal rights can file an Information. The Commission rejected this contention, stating that the statutory scheme of the Competition Act does not require the Informant to be an aggrieved party. The Act allows any person to file information, emphasizing an inquisitorial system rather than an adversarial one.

2. Relevant Market and Dominance of Google
The Commission delineated the relevant markets as:
a) Market for licensable mobile OS for smart mobile devices.
b) Market for app stores for Android OS.
c) Market for apps facilitating payment through UPI.

The Commission reaffirmed its earlier findings that Google is dominant in the first two markets. For the third market, the Commission noted that UPI-based payment apps offer unique features compared to other digital payment solutions, making it a distinct relevant market.

3. Allegations under Section 4: Abuse of Dominant Position
The Informant alleged multiple instances of abuse of dominant position by Google, including unfair privileging of Google Pay, mandatory use of Google Play's payment system, and imposition of unfair terms on users.

4. Exclusivity Regarding Mode of Payment for Purchase of Apps and In-App Purchases (IAPS)
The Commission found prima facie evidence that Google's mandatory use of its payment system for app purchases and IAPs restricts the choice available to app developers, potentially leading to higher costs and reduced competitiveness. The Commission noted that such a policy might disadvantage Google's competitors in downstream markets and could be considered unfair under Section 4(2)(a) of the Act.

5. Pre-installation and Prominence of Google Pay on Android Smartphones
The Commission observed that pre-installation of Google Pay on Android devices could create a sense of exclusivity and default, potentially affecting the competitive landscape. The Commission agreed with the Informant that this conduct merits detailed investigation to understand its impact on competition.

6. Search Manipulation and Bias by Google in favour of Google Pay
The Informant alleged that Google skews search results on the Play Store in favor of Google Pay. The Commission noted that search plays a critical role in app discovery and that biased search results could mislead users. However, the Commission found that the evidence provided by the Informant was insufficient to warrant an investigation on this count.

7. Prominent Placement of Google Pay on the Play Store
The Informant alleged that Google manipulates its featured app lists to favor Google Pay. The Commission noted that if such manipulation occurred, it could amount to self-preferencing and unfair competition. However, the Commission found no concrete evidence to support these allegations and decided not to order an investigation on this basis.

8. Search Advertisement Manipulation on the Play Store
The Informant alleged that Google privileges Google Pay in search advertisements. The Commission noted that search advertisements are paid results and that self-preferencing in ads by a dominant platform could violate the Act. However, the Commission found no concrete evidence to support these allegations and decided not to order an investigation on this basis.

9. Exclusivity Requirement Imposed by Google Resulted in Unfair Terms Being Imposed on Users
The Informant alleged that Google imposes unfair terms on users by requiring them to use Google Pay, which allegedly does not comply with data localization requirements. The Commission observed that compliance with sectoral regulations should be examined by the concerned regulator and decided not to delve into this issue.

Conclusion
The Commission found prima facie evidence that Google has contravened various provisions of Section 4 of the Act and directed the Director General to conduct a detailed investigation. The Commission also noted that the issue of cross-examination of the Informant would be decided by the DG at the appropriate stage. The Opposite Parties were given sufficient opportunity to present their case and can make further submissions during the investigation. The Commission made it clear that the observations in the order should not be construed as a final expression of opinion on the merits of the case.