TaxTMI 
TaxTMI 
2022 (10) TMI 953
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.... Mr. Abir Roy, Mr. Dhruv Dikshit, Advocates along with Mr. Mark Buse, Representative of Match Group For Alliance of Digital India Foundation (ADIF) Mr. Abir Roy and Mr. Vivek Pandey, Advocates along with Mr. Tom Thomas, Representative of ADIF Order under Section 27 of the Competition Act, 2002 1. The Information in Case No. 07 of 2020 was filed on 21.02.2020, under Section 19(1)(a) of the Competition Act, 2002 (the 'Act') by XYZ (the 'Informant') against Alphabet Inc., Google LLC, Google Ireland Limited ('Google Ireland'), Google India Private Limited ('Google India') and Google India Digital Services Private Limited ('Google Digital Services') alleging contravention of various provisions of Section 4 of the Act. The opposite parties are hereinafter collectively referred to as 'Google/ Opposite Parties'. 2. The Information in Case No. 14 of 2021 was filed by Match Group, Inc. ('Match Group') under Section 19(1)(a) of the Act against the Opposite Parties alleging contravention of the provisions of Section 4 of the Act. It was stated in the Information that Match Group, through a portfolio of companies it owns, is engaged in the provision of dating / companionship product....
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....03 under the Companies Act. It has been submitted by the Opposite Parties that since 01.04.2016, Google India has been appointed by Google Asia Pacific Pte Ltd, Singapore ("Google Singapore") as a non-exclusive authorised reseller of online advertisement space in India provided by Google Asia Pacific Pte Ltd through Google Ads program to advertisers in India (prior to that time it was the non-exclusive reseller of online advertising space appointed by Google Ireland Limited). Google India also acts as a non-exclusive reseller of standardized Google enterprise products (currently known as Google Workspace), to customers in India. In addition, it also provides a limited set of Information Technology Services ("IT services"), and Information Technology Enabled Services ("ITES") to other overseas group companies. 7. Google India Digital Services Private Limited ("Google Digital") is incorporated as a private limited company under the Companies Act. It has been submitted by the Opposite Parties Google Digital undertakes the commercial operation of the "Google Pay" (formerly known as "Tez") application in India. Facts as stated in the Information in Case No. 07 of 2020 8. The In....
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....es, regardless of whether the OS developer in question has already developed a basic and feature phone OS. The Informant also averred that there is no substitutability between mobile OS for smart mobile devices and desktop/computer OS. Further, from the perspective of the OEM, a non-licensable mobile OS made by a vertically integrated developer for its own products, is not a substitute for a licensable mobile OS for smart mobile devices. Therefore, non-licensable mobile OS are not part of the same market as that of licensable mobile OS for smart mobile devices. The Informant also placed reliance on decision of the European Commission (EC)^ European Commission (EC) decision in Case AT 40099 - Google Android (EC Android Decision) wherein the EC recognised that the markets for smart mobile OS and basic and feature phone OS, are separate markets. The Informant has also placed reliance on the order of the Commission dated 16.04.2019 passed under Section 26(1) of the Act in Re: Umar Javeed & Othrs AND Google LLC & Othrs bearing Case No. 39 of 2018 (Google Android Order) for this market. 13. In relation to market for app stores for Android OS, the Informant submitted that app stores ar....
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....de markets for licensable OS for smart mobile devices and app stores for Android are considered as the relevant geographic markets, there would be an insignificant to no change in the assessment of dominance of Google and therefore, detailed analysis of market definition is not necessary. 16. The Informant also averred that Google enjoys a dominant position in the relevant market(s) for licensable mobile OS for smart mobile devices in India, and the market for app stores for Android mobile OS in India. It was also averred that Google enjoys a position of strength in both of these markets which enables it to operate independently of competitive forces and to affect its competitors/ consumers as well as these markets in its favour. 17. The Informant inter alia alleged that Google is abusing its dominant position in the markets for licensable mobile OS for smart mobile devices and app stores for Android OS by (a) 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 (which privileges Google Pay over other apps facilitating payment through UPI and mobile wallets), if they w....
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.... Investigation by the DG 22. The investigation involved detailed information collection from the Informants, OPs and the third parties. Further, the Investigation also collected information/ data/ market reports, which were available online, the same are referred/ annexed in the Investigation Report at appropriate places. 23. It is also noted that apart from the Opposite Parties, during the investigation the DG identified certain other parties which were concerned with the products of Google (like Google Play Store and Google Play Billing System) within the scope of the present investigation. These other parties related to Google are (a) Google Asia Pacific Pte Ltd., Singapore ("Google Singapore") which is responsible for *********** ; and (b) Google Payments India Private Ltd ("GPIN") which is incorporated in India and responsible for *************. 24. Based on the analysis of various factors mentioned in the Act, following relevant markets were delineated by the DG: i. Market for licensable mobile OS for smart mobile devices in India; ii. Market for App Stores for Android OS in India; and iii. Market for apps facilitating payment....
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....ket for in-app payment processing services in violation of the provisions of Section 4(2)(b)(ii) of the Act. 29. Further, as per the DG, Google's Payments Policy requiring mandatory and exclusive use of GPBS denies the payment aggregators/ payment gateways access to the market for processing of payments and allied services availed by App developers who sell in-app contents. Thus, Google was found to be following the practices that results in denial of market access for payment aggregators in violation of the provisions of Section 4(2)(c) of the Act. Further, by forcing app developers to exclusively use GPBS, Google was found to be leveraging its dominance in market for licensable mobile OS and app stores for Android OS, to protect its position in the market for Android in-app payment processing in violation of the provisions of Section 4(2)(e) of the Act. 30. The DG further concluded that Google has excluded other UPI apps as effective payment option on the Google play Store. As per the DG, Google follows a discriminatory approach towards other UPI apps, while making payment on Google play Store. Google Payments Platform enabled the intent flow with the Google Pay UPI App....
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....ise of the said Informant, which was stated to have taken place on 23.04.2021 on account of complications arising from COVID-19. It was further averred in the application that the spouse of the Informant wishes to pursue the captioned case as legal representative. Accordingly, it was requested that the spouse of the Informant be taken as the Confidential Informant on record in the captioned matter on account of the demise of the Informant. The Commission considered the said application in its meeting held on 04.04.2022 and for the reasons detailed therein, rejected the same. The Commission also ordered that no further communication shall be made with the Informant in Case No. 07 of 2020. 35. Further, the Commission, vide its order dated 18.04.2022, directed setting up of a Confidentiality Ring to grant access to the confidential case records, as prayed for by Google, subject to the stipulations made therein. Pursuant to setting up of the Confidentiality Ring, the Commission, vide its order dated 14.06.2022, inter alia directed to forward electronic copy of the confidential version of the Investigation Report to Google through one of its Confidentiality Ring Member (CRM), with th....
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.... India (General) Regulations, 2009 and Practice Direction issued in this regard. Google in its reply has contested the findings of the DG. The averments made by Google as well as the Informant(s) would be referred to in this order and dealt with while analysing the matter on merit. Analysis and findings of the Commission Relevant Market and Assessment of Dominance 42. In terms of Section 2(r) of the Act, relevant market is defined as "the market which may be determined by the commission with reference to the relevant product market or the relevant geographic market or with reference to both the markets." 43. Further, Section 2(t) of the Act defines 'relevant product market' as "a market comprising all those products or services which are regarded as interchangeable or substitutable by the consumer, by reason of characteristics of the products or services, their prices and intended use." Moreover, Section l9(7) of the Act provides a list of factors to be considered by the Commission for determination of the relevant product market, which includes physical characteristics or end use of the goods, price of goods or services, consumer preferences, etc. 44. A rele....
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.... a.) Market for licensable mobile OS for smart mobile devices in India, b.) Market for app stores for android OS in India, and c.) Market for apps facilitating payments through UPI in India. 48. The DG has also found Google to be dominant in the first two relevant markets i.e., market for licensable mobile OS for smart mobile devices in India and market for app stores for android OS in India. 49. The reasoning and findings of the DG, the submissions of the parties and the analysis of the Commission, in this regard, is given in succeeding paragraphs. A. Market for licensable OS for smart mobile devices in India 50. The Commission notes that Operating Systems (OSs) are complex software products that control the basic functions of the device on which it is installed and enable the users to make use of such device. Accordingly, smart mobile OS are designed to support the functioning of smart mobile devices and other compatible software applications (apps). It enables the user to make use of such mobile device and run application software on it. Mobile OS is a crucial part of any smart mobile device. Moreover, smart mobile OSs typically provide a gr....
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....and tablets depend upon the utility of the phones and the technology including the internet capabilities. Feature phones generally refer to earlier-generation phones that were developed in the era of 2G mobile services. Their appearance and interface were different from modern smartphones. They usually had a small screen with a keypad and limited internet access options. Smartphones and tablets are more versatile, combining the functions of feature phones (call and text), cameras, and computers (work, entertainment, internet access). They typically come without a keypad and enable the user to interact via touchscreen (there are exceptions to this, e.g., certain BlackBerry devices) ... " 54.2. Vivo Mobile India Private Limited (Vivo), an OEM has stated that, '... The user interface is different from the basic/feature mobile phone. The user can perform touch screen processing with fingers and gestures to issue various instructions... Users can access & install various applications through the smartphone OS, and the system provide users with unified management like process management, memory management, and authority management ... With higher-perform....
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....egrated third-party apps. Other than this, smart mobile devices have powerful hardware in terms of RAM, screen size and power requirements compared to basic feature phone devices. This further implies development of OS for smart mobile devices requires greater amount of time and resources compared to its counterpart for basic feature phones. Moreover, the smart mobile devices are expensive compared to basic feature phone due to these functionalities. 57. The Commission is of the view that due to these significant differences in the capability of the smart mobile devices vis-à-vis feature phones, an OEM cannot use feature phone OS on a smart mobile device and vice versa. 58. Further, from supply side perspective also, the suppliers of feature phone OS are different from smart phone OS suppliers as the development of a smart mobile OS requires significant time and resources. Even if the developer in question has already developed a basic and feature phone OS, it will take significant investment both monetary and non-monetary to develop a smart phone OS. Thus, there are substantial barriers of entry associated with development of smart mobile OS. The Investigation has als....
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....obile phone systems is relatively limited, and the hardware resources are not as good as computers, which may result in relatively low system computing power ...Based on the hardware characteristics of mobile phones, there are differences in the interaction methods supported by mobile phone systems. Mobile phone systems use more screen clicks, presses, and slides to complete command triggers, while PCs/Laptops rely more on mouse and touch versions... Based on the user's usage scenario, the system needs to support such as communication wireless radio frequency management and control capabilities (including SIM card), health detection related sensor data interpretation capabilities, etc. ...' 62. It is also noted that Google itself, has developed Chrome OS, for licensing to computer manufacturers to produce PCs/ laptops whereas, Android OS is licensed for smart mobile devices. Google does not license Chrome OS for smartphones. Further, smart mobile OSs, also require functionalities that are specific to smart mobile devices and are different from those of PC/ laptop OSs viz. in terms of touchscreen, processing capabilities, smaller screen sizes, memory, display, and power m....
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.... relevant market. 66. In this regard, the DG has noted that out of the two prominent non-licensable operating systems for smart mobile devices i.e., Apple and BlackBerry, the latter has negligible market share of 0.01%. Therefore, iOS is the only significant non-licensable OS for smart mobile devices which is used by vertically integrated Apple, for captive use in their own smart mobile devices. In other words, Apple does not license its iOS to third party smart mobile device OEMs and uses the same in manufacturing its own smart mobile devices i.e., iPhone and iPad. In this relation, the Commission observes that from a demand side perspective, third party smart device OEMs viz. Xiaomi, Vivo, Oppo, Samsung, etc. can only install those smart mobile device OSs in their respective devices, which are available for license by the OS owner/ developer (viz. Google's Android, etc.). Such OEMs cannot obtain non-licensable OSs (viz. Apple's iOS and BlackBerry OS) as the same is not granted by the OS owner. Thus, from the perspective of the OEMs, switching to such non-licensable OSs is not an option and thus, cannot be considered as a potential substitute to licensable OSs. 67. In this c....
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....amming language managed by the Kotlin Foundation (a group created by JetBrains and Google). It is an open-source, statically-typed programming language which supports object-oriented and functional programming. On the other hand, iOS app developers use Objective - C and Swift as the official programming languages. - Development tools: To create an app for Android, the developers use Android Studio. For iOS, the developers use XCode.' 68. Based on the above submissions, it is noted that non-licensable OS such as iOS can only be used in Apple mobile devices, thus the same is not substitutable with licensable OS. Further, even from the app developer perspective also, there are multiple technical differences between Android and iOS viz. programming languages, development tool kits, testing and interface requirements, etc. The app developer cannot simply port the app developed for one OS onto another OS due to these technical differences. In view of the above submissions, highlighting the factors differentiating operating systems such as programming language, platform specific capabilities and development tools, it is concluded that there are significant switching costs ....
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....t position in the relevant market of licensable mobile OS for smart mobile devices in India. The observations of the Commission in this respect are as follows: a.) Market Share 74. The Investigation has revealed that Android enjoys high market share in the market for licensable mobile OS for smart mobile devices in India. As per the data of statcounter.com, as of January 2022, in the broader segment for smart mobile OS in India (which includes even iOS which is not part of the relevant market), Android OS' market share was approximately 95.06%.^1 Similar inference can be made from the data available on statista.com (tabulated below). Market share of mobile operating systems in India from 2012 to 2020^2 Year 2015 2016 2017 2018 2019 2020 Android 61.6 70.73 79.04 88.57 92.06 95.23 iOS 1.61 2.37 2.8 2.95 2.67 3.21 KaiOS 0 0 0 1.29 3.68 1.1 Samsung 4.4 2.31 0.99 0.64 0.42 0.16 Tizen 0.19 0.53 0.87 0.5 0.28 0.1 Windows 2.04 1.77 0.94 0.45 0.17 0.04 Series 40 ....
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....nal written approval if they want to use a suite of proprietary apps known as Google Mobile Services (GMS). GMS includes a variety of Google apps, such as Google Maps, YouTube, Google Play, and Google Search. The Android Compatibility Program requires handset manufacturers to comply with certain specifications and contract terms. 79. Further, Google owns the intellectual property rights (IPR) of the Android OS. Perusal of the brand guidelines^3 revealed that 'Android' is a trademark of Google LLC. The use of the 'Android' trademark on hardware, packaging or marketing materials of device is restricted to Android-compatible devices only. Google is responsible for release for every new version of Android mobile OS. Similar scrutiny of Android Compatibility Program^4 revealed that each version of Android requires the compliance with a separate Compatibility Definition Document ('CDD') and Compatibility Test Suite ('CTS'). It is only after complying with the CDD and passing the CTS that the device of an OEM is Android compatible. 80. Google has contended before the DG that OEMs can customize and modify Android OS to build differentiated versions, thereby offer competition to Andro....
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....ossible. Furthermore, apps are written to platform specific APIs which enables apps to interface correctly with OS. However, there are certain switching costs such as convenience, loss of time or financial terms associated with porting of apps from one OS to another. In addition, there is an indirect network effect in occurrence as platform's attractiveness increases when number of service provider's (app developers) rises. Thus, availability of large number of Apps on Play Store is also a reason for Android's growth. Google Play store is a marketplace for apps and services is a collection of more than 3 million apps. 84. Google also provides its Google Mobile Service (GMS includes widely used Google apps including Google Maps, Gmail and YouTube) suite for Android devices, which mainly includes the application store Google Play, working with Google Play Services (GPS), which is a software component that ensures that apps using Google APIs are properly communicating with Google online services. In order to have access to these Google's proprietary apps, OEMs need to sign MADA which involve a number of restrictions on the applications that can be preinstalled on their mobile devic....
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....ers. Accordingly, developers of new OSs have to overcome two significant barriers to entry in order to be able to viably compete with existing OSs such as Android OS. Firstly, the developer of a new OS would require the technology-related capability to develop a new OS. Secondly, the developer would have to overcome ecosystem -related barriers to entry, particularly, those related to developing an ecosystem which renders the OS commercially viable. In United States v. Microsoft, the US Court of Appeals upheld the District Court's observation that this "applications barrier to entry" stems from two characteristics of software markets: (1) most consumers prefer an OS for which a large number of applications have already been written; and (2) most developers prefer to create applications for an OS that already has a substantial user base. This "chicken-and-egg" situation arising out of the applications barrier to entry means that applications will continue to be written for existing OS, which in turn ensures that consumers will continue to prefer it over new entrant OSs...." 87. Apart from design, functionality and features of Android OS, the main reason ....
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....r inertia, satisfaction with the characteristics of Android devices and brand loyalty which may prevent any switching to the competing OS. It is noted that users face considerable switching cost while changing an operating system. This factor further adds to the hegemony of Google in the delineated relevant market for licensable OS for smart mobile in India. e.) Barriers to Entry in market for mobile OS 92. The Investigation has also revealed that development of mobile operating system requires significant amount of capital and investment in Research and Development both at stage of launch and further in marketing of OS. In addition, periodic investments are also needed for maintenance, release of newer versions and development of updates and new functionalities. 93. Google has stated that*********** has been spent in developing Android, and even more in the Android ecosystem as a whole (including the open-source OS and Google's proprietary Android apps). Further, it continues to incur significant costs annually in maintaining and updating the Android platform. 94. In this regard, it is also apposite to refer to submissions of following third parties: 94.1. According....
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....he Android OS, and hence requires lesser investment in research and development. For any new entrant with sufficient capital, time, and resources, developing an OS is not a significant challenge. However, the ecosystem of existing app developers may pose a greater challenge for a new player trying to develop a smartphone OS. App developers must be willing to develop apps compatible with the new OS to enable the new OS to compete with existing operating systems in the market. This requires time and effort on the part of the App developers, who would ordinarily prioritize developing and updating apps for a more popular OS than a new OS. Accordingly, a new OS may face a barrier to entry in the form of an unwillingness of App developers to develop apps for their OS." 94.5. Karbonn has explained the various entry barriers faced by a new entrant in market for mobile OS. The relevant extracts of his submission are reproduced below: "The investment of capital and technology, sunk cost, gestation period, recurring expenses, cost on new innovation etc. are really not the entry barrier rather these are important aspects and new entrant would plan for wile entering in to this space....
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....velop a fork faced significant difficulties in entering the market because of Google's anti-fragmentation restrictions. All developers were required to agree not to take "any actions that may cause or result in the fragmentation of Android OS". This restriction appeared in various forms: the separate GMS licensee AFA, as a clause in the MADA under which OEMs obtain GMS and as "click-through" terms in at least some versions of the SDK License for app developers.... Under the MADA, Google had the right to approve a GMS licensee's device before launch "to ensure adherence to the terms and conditions of [the MADA], including but not limited to the Google's Mobile Branding Guidelines". These restrictions mean that GMS licensees cannot distribute Android devices if they do not comply with Google's Android CTS and CDD, as the MADA makes the GMS license contingent on devices being Android Compatible Devices... Google alone administers the CTS and CDD, and retains broad discretion to veto or block distribution of devices. Amazon understands that Google requires GMS licensees to submit all Android devices to Google for approval (described above), regardless of whether the devices include GMS....
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....duct does enhance inability of new players to enter and sustain their presence in the market for licensable mobile OS for smart mobile devices in India. 100. It is further noted that despite free availability of AOSP license, a large number of OEMs have signed AFA/ ACC and MADA and obtained Google's APIs, which evidences that Google's Android is not constrained by instant and free availability of AOSP and the same is not a substitute of Google's Android. 101. Further, as revealed by the Investigation, no new OS developer has been able to enter the market of licensable smart mobile OS in the last five years. On the contrary, the exit of Microsoft's Windows Phone OS the market in 2016 and inability of Amazon's Fire OS to make any footprint in the Indian market has further consolidated the market power of Android OS thereby leaving the OEMs much more dependent on Google. This further evidence the existence of entry barriers in the relevant market. f.) Indirect Network effect 102. As already stated, Operating Systems exhibit indirect network effects i.e., the benefit to users of an operating system increases with the volume and quality of native apps they can access on that....
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.... avers that from the point of view of developers, licensable and non-licensable OS are substitutable channels for distributing apps. In their responses to the DG, multiple developers confirmed that they make their apps available across both iOS and other OS such as Android OS. 106. The Commission is of the view that there is no dispute that from the mobile OEMs' viewpoint, only licensable mobile operating systems constitute the set of alternatives that they can rely on, for manufacturing mobile handsets. Thus, from the OEMs' perspective, licensable mobile operating systems is indispensable and cannot be substituted with non-licensable OSs. 107. Looking at situation from end user perspective, the Commission notes that smart device ecosystem of Apple (based on iOS) and Google (based on Android OS) have emerged as the two major mobile ecosystems, former being non-licensable and closed source whereas latter being licensable and open source. Some consumers may have preference for closed ecosystem like Apple and others may have a preference for open ecosystems like that of Google. Thus, in some limited sense, the end consumer may have the choice of a smart device based on an altern....
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....f the device, after sales services, etc. and OS is one of such criteria. Therefore, the competition between two ecosystems cannot be limited to OS alone. 110. For app developers, app stores have become a necessary medium for distribution of their apps to the end users. Now, availability of an app store is dependent on OS installed on a smart device i.e., an app developer cannot use Apple's App Store for distributing apps to Android users and vice versa. Thus, from the app developers' perspective, the app store available on Android OS (a licensable mobile operating systems) cannot be substituted with an app store available on iOS (a non-licensable OS). Google's assertion that from the point of view of developers, licensable and non-licensable OS are substitutable channels for distributing apps based on the fact that multiple developers make their apps available across both iOS and Android OS (i.e., multi-homing) is completely misdirected and reflect incorrect understanding of the market. Multi-homing by app developers should not be confused with demand side substitution. Even if app developers' multi-home across licensable and non-licensable mobile operating systems, such multi-h....
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.... maintaining the platform's trust and integrity. A digital marketplace grows more desirable to customers as more high-quality vendors join. Similarly, a digital marketplace grows more desirable to vendors as it attracts more consumers. This property of digital marketplaces is known as an "indirect network effect", which primarily governs the success of the marketplace. 115. Referring to a report published by The Netherlands Authority for Consumers & Markets^5, the DG has also observed that a greater number of apps that are available for a particular OS also attracts users to that OS, which in turn further creates a larger audience for app developers to sell more apps. The number of apps available on a particular OS also incentivises OEMs to install such OS on their mobile handsets, since they are aware that this will attract a larger number of users; the more OEMs install an OS the more users run their smartphones on this mobile OS, and the larger the potential audience is for apps that are available for that OS. This virtuous cycle of scale can be demonstrated, by way of following image: 116. App stores can also be characterised as multisided platforms, consisting of dif....
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....on as well as determination of Google's dominance in the said market. Google claims that Play Store is one of numerous distribution channels where developers can distribute their apps and digital content and where users can access and/or purchase such content. 121. The Commission has perused the findings of the DG along with the evidence collected, objections filed by Google and other material on record. The observations of the Commission in respect of delineation of relevant market are as follows: i. Substitutability of app stores for non-licensable OS and App Store for Android OS 122. The Commission notes that apps are written/ developed for a particular OS and cannot be automatically ported to another OS due to various platforms' differentiating features which includes programming language, APIs and other technical parameters. Thus, app stores for non-licensable OS such as iOS and Blackberry cannot be run on Android as they have been specifically developed for these OSs. The OEMs who have installed Android OS on their respective smart mobile devices cannot provide an app store which is technically incompatible with Android OS. In other words, availability of app store o....
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....ss of iPhones, by attracting thousands of app developers whose apps add significant value for iOS device users. Apple operates a closed ecosystem, which includes its hardware, software and services. Apple's business model is based around vertical integration, with Apple present at all layers - hardware, operating systems, software and services. On the one hand, this tight integration has contributed to user convenience and user experience. On the other hand, it impairs the ability of consumers to switch to competitors' products and services; this is sometimes referred to as the 'Apple Ecosystem Lock'.. " 125.2. InfoEdge, in its submission, stated that: "... Application of one platform cannot be used on any other OS since they all are developed on different languages so they do not support each other's APKs. Therefore, they are not portable from one OS to another. Therefore, it is not possible to submit apps made for one OS to another OS..." 125.3. Zomato, in its submission has stated that: '... Across OSs, there ore differences like the choice of programming language used to develop applications, the APIs that the OS allows app developers....
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....m other sources requires several additional steps to be followed by users than is required for downloads from an app store. In addition, it is extremely difficult for side loaded apps to roll out updates, fix bugs, etc. Such automatic updates are important from both the users as well as the app developer's perspective, and therefore, this makes side loading a less viable option. 130. The Investigation has also revealed that Google tries to deter side loading through an array of technological hurdles, including a complicated multi-step process requiring the user to make changes to the device's default settings and manually granting various permissions, while encountering multiple security warnings that suggest side loading is unsafe. A user has to go through multiple steps and faces several warnings that are worded in a way that is likely to reduce the likelihood of users sideloading apps. This is further corroborated by submission of app developers, which are enumerated below. 130.1. ************************************ ************************************ ************************************ ************************************ ***....
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....ant efforts to achieve the same. Such automatic updates are important from both the users as well as the app developer's perspective. However, in relation to updating side-loaded apps, the investigation has revealed that such updation requires repeating the entire process again, as updates for such apps are not rolled out by Google Play. Submissions by App Bazaar (a third-party app store) also indicate that these drawbacks pertaining to side loading applications on device makes third-party app stores less attractive to users and developers. 133. In this relation to Google claims that the Android 12 update (which was released in October 2021) allows the automatic updating of an app distributed outside of Google Play, where users have given the appropriate consent. Google avers that with this change, from a user's perspective, updating apps will be the same on and off Google Play. In this relation, the Commission notes that firstly, the Commission is examining the conduct of Google on ex-post basis i.e., where it was difficult to sideload the apps and users were not opting for side-loading. Secondly, Android 12 which has apparently allowed automatic update of sideloaded apps, was ....
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....lopers cannot rely on these technical alternatives to distribute their apps. 137. Based on the above analysis, the Commission is of the view that sideloading is not a viable substitute for downloading apps as compared to app stores for Android OS. iii. Substitutability between web apps and apps downloadable from app stores for Android OS 138. It is noted that web applications are internet-enabled apps that may be accessed using the web browser on a mobile device. To use these online apps, users do not need to download and install the app on their devices. Moreover, web apps are considered to be less user friendly, have fewer options for unique functions. Further, there is no central store, where all the available web apps are displayed. Additionally, web apps aren't designed to work on smart phones. As a result, they function poorly and take longer to load in the form of websites in the browser, and they cannot be accessed offline. Content supplied to end user by such apps is static i.e., without any need to be modified, created and processed, thereby limiting user experience. 139. In this regard, the DG has referred to the findings of Interim Report of Australian C....
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....very limited app developers have offered their apps through web apps and continue to be make their content available to users only through native apps. The Commission also find merit in the argument of the Informants in this regard that if PWAs were effective substitutes to native apps, all large app developers (Amazon, Uber, Ola, Zomato, Swiggy) would have changed their app-business model to PWAs. A web app developer needs significantly more resources to attract users on their platform as compared to easy access through an app store. Further, web apps do not have centralised distribution and discoverability as native apps. 144. Based on the above analysis, the Commission concurs with the findings of the DG that web apps are not an alternative to apps downloadable from app stores for Android OS. iv. Substitutability of pre-installed apps with apps downloaded from app stores 145. Pre-installation of the app on the smart devices by the OEMs is another possibility for app developers to reach out to the end users. In this regard, referring to the ACCC Interim Report, the DG has found that pre installation of apps is not considered any commercially viable option by app de....
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....s an alternative cannot be generalised and thus, cannot be considered as a substitute of access through app store. 150. Moreover, OEMs which use Android OS are required to assign prominent placement to Google's own application through MADA, thus, OEMs are less attracted to pre-install more apps. Additionally, allowing pre-installation of thirdparty apps occupies excessive disk space and memory, which is not liked by users as they are provided lesser space for their own preferred apps. v. Substitutability between different app stores for Android OS 151. The Commission notes that there are multiple app stores for Android OS which includes, Samsung Galaxy App Store, Xiaomi App Store, Huawei App Store, Oppo App Store, Amazon App Store, Aptoide App Store, etc. These other app stores are primarily OEM specific (with very few exceptions viz. Aptoide) and are pre-installed by the respective OEM only, alongside Google's Play Store on their smart device. E.g., Samsung Galaxy App Store is installed by Samsung in its devices only and is not installed by other OEMs. Thus, these other Android app stores though are substitutable with Google's Play Store individually, but in a l....
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....as claimed that Google Play Store provides a host of services to app developers. Some of the extracts from Google's response are as follows: "...On Google Play, developers have access to all the necessary data to innovate and compete effectively. Google Play provides access tools, programs, and insights that helps developers reach and engage users so they can grow their apps and games. Developers can easily upload their apps on Google Play (for example, choosing distribution countries and distribution prices), and they have access to extensive analytics tools in real time around their app's performance, ratings, and how sales are developing Google informs developers on the performance of their apps based on aggregated data. On the Google Play Console, developers can see additional information for each product, such as: ● the devices on which purchases have been made, or the relevant country; and ● a breakdown of various metrics related to their app's performance, such as the number of active devices their apps have been downloaded on, the number of times an update to their app has been installed, or the number of times their ....
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....mission in this respect are as follows: a. Market Share Analysis 162. As already stated, there are various app stores store which have been developed for Android smart mobile OS which, in addition to Google's Play Store, includes Samsung Galaxy App Store, Xiaomi App Store (Mi-Store), OPPO App Store, Huawei App Store, Aptoid App Store, etc. 163. The Commission is of the view that market share is one of the primary though not determinative parameters to assess dominance in a relevant market. There are atleast two methods to disinter, the market share of Google in the relevant market. Firstly, calculating the share of smart mobile devices using Google Android on which a given app store is pre-installed. This method allows for an assessment of the economic strength of an Android app store at the level of OEMs, which pre-install app stores on their Android devices. Secondly, calculating the market share of a given Android app store on the basis of the number of apps available via that store. This method allows for an assessment of the economic strength of an Android App store at the level of app developers or the choice available to users of Android devices. Thus, using b....
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....ximately ********* smartphones in the year 2020 out of the total 149 million smartphone shipped in India i.e., around ****of the smartphone shipped in India. This further add validation to the argument that Google is dominant in the relevant market for app store for android OS in India. 169. Google's position in the relevant market is reinforced by the number of Apps available on the Google Play Store. The Play Store is the app store with the largest quantity of apps.^9 The same is reproduced in the form of graph as under: 170. This data is corroborated from the data submitted by Google in relation to numbers of Apps available on Google Play Store for Indian users. The same is reproduced herein under along with data pertaining to numbers of Apps downloaded in India: Year No. of Apps on Google Play Available to Users in India Number of Apps Downloaded in India 2013 ********* 1,682,586,292 2014 ********* 2,412,739,089 2015 ********* 3,592,490,412 2016 ********* 6,166,857,535 2017 ********* 11,640,201,493 2018  ....
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....he market for app store for Android OS. 175. From the data collected by the DG, the Commission further notes that the total number of active app developers on Google Play Store and Amazon App Store are as follows (as of January 2017)^10: Name of App Store Number of Developers Google Play Store 724000 Amazon App Store 69000 176. Thus, it is noted that Google Play Store leads other app stores in terms of the number of developers in the market for app stores in Android OS. App developers prefer to support their apps for Google Play rather than other app stores because of its larger user base. b. Barriers to Entry 177. Based on the available information on record, the Commission notes that the relevant market for app store for Android OS is characterised by various entry barriers. The requirement of significant investment in developing, marketing, and updating an app store for Android OS is one of them. 178. In this context, it is pertinent to note the submission of Amazon: ************************************ ************************************ ************************************ ************************************ ....
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....cations, resulting in users not having enough third- party applications to use. Moreover, main obstacle to the late comers of the system is the shortage of the third-party applications and new feature..." 181.4. Microsoft mentioned that, "... During the time it was operational, Windows Phone devices (having the in-built Microsoft App Store), potentially suffered because of the so-called "app gap." App developers did not find it economical to port and support their most popular apps for Windows Phone OS given its low market share compared to iOS and Android. As a result, the Windows Phone OS platform did not have many of the popular mobile apps on which consumers had come to rely. Without these apps, Windows Phone had trouble attracting and retaining users. In later years, Windows Phone OS (having the in- built Microsoft App Store) suffered from quality issues, due to Microsoft prioritizing other projects. Even at the height of its popularly, i.e., in the period from 2013 to 2015, Windows Phone OS never exceeded a market share of 2-3% on a worldwide basis..." 182. Based on the above, it is noted that both app developers and app users are immensely important in ensurin....
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....for app developers to port their apps from Android OS to Fire OS. Based on the above, the Commission notes that a competing app store has to offer not only the store but also develop its own APIs with similar functionalities as those of Google Play Services. Thus, the un-availability of Google Play services APIs also acts as an entry barrier in the relevant market. 186. In addition, the DG has also noted that MADA requires OEMs to preinstall 'Google Applications' (including Google Play) to be prominently presented 'at least on the panel immediately adjacent to the Default Home Screen' and others 'no more than one level below the Phone Top.' Some of the newer versions of MADA agreements even specify the sequence, from left to right and top to bottom, in which the Google apps must be presented. This prominence given to Google applications results in a status-quo bias of consumers. Further, many of the pre-installed apps cannot be deleted. These issues suggest that such preinstallation makes solving the 'chicken and egg' problem more difficult since it requires overcoming the status quo bias of consumers. This is further corroborated by submissions of App developers. 187. Map my....
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....missions************* ************* ************* ************* 191. In this regard, the DG has also referred to the UK CMA Report which observed that 'the majority of app developers that responded to our request for information did not use side-loading as a distribution channel or identify it as an alternative to the Play Store. Reasons provided for this included the process users have to go through on Android devices to side-load apps ... side-loaded apps may lead to a suboptimal experience as features may break and because it requires users to turn off the security settings on their device.' 192. Based on the above, the Commission is of the view that side loading of an app store / app does not offer a competitive constraint on Google's position in the relevant market for App Store for Android OS based devices. Process of side loading apps involves a serious risk of malware which serves as an entry barriers for third party app stores. Moreover, the process of side loading requires reducing security settings of the mobile device, which users may not be interested in. The cumbersome process of side loading and security threats involved further enhances the dependence....
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....s; and (c) end users to wish to access app stores to access content or avail other services. For reasons already discussed above, an OEM can only choose to pre-install an app store which supports the OS being used by the OEM. Since, presently, there are only two smart device OSs prevailing in the mobile ecosystem i.e., Apple's iOS (which is a non-licensable OS) and Android OS, which is virtually and practically the only OS available to those OEMs who are dependent on third party OSs for their smart devices. Thus, once the OEM has chosen to manufacture smart devices using Android OS, they can only choose app stores which are written for Android OS (viz. Google's Play Store and other OEM specific app stores). For these OEMs, Apple's App Store is not an option at all and thus cannot be considered as a substitute. 198. Once the OEM has installed particular app store on its devices, the same becomes a door between app developers and the users. An app developer to reach the user base on a particular OS/ ecosystem (i.e., Android or iOS), must rely on the app store on that particular OS only. In other words, an app developer cannot reach an iOS user through Google's Play Store and an An....
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....ty between Google's Play Store and Apple's App Store. Accordingly, the Commission is not convinced by the arguments of Google and notes that Apple's App Store cannot be considered to be the same relevant market as that of Google Play Store. Once Apple App Store is excluded from the relevant market for Google Play Store, there is no question of exercising any competitive constraints from Apple App Store. 202. Further, Google has attempted to use a literal interpretation of Section 2(t) of the Act, to claim similarity between Play Store and Apple's App Store based on characteristics, prices and intended use. After examining the averments of Google, the Commission is of the view that firstly, the interpretation of any statutory provision and specifically for economic legislations, cannot be divorced from the commercial reality and technical feasibility. For various reasons already discussed above which reflect the actual market outcomes, Google's Play Store and Apple's App Store cannot be considered as substitutes. Secondly, even the literal interpretation adopted by Google is also devoid of any merit and thus needs to be rejected. Section 2(t) provides that relevant product market....
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....the evidence independently and findings have been arrived at on the basis of material on record. Having said that, it is clarified that nothing prevents the authorities from looking at the decisions given by counterpart agencies if the issues involved in the domestic proceedings are similar to those involved in other jurisdictions Secondly, Google itself admits that the development of its products as well as various agreements as well practices are global in nature and therefore, it is futile to claim that the same are irrelevant. The reports of other agencies are not determinative but have persuasive value. The conclusions of the Commission are based on evidence available on record and after considering the specificities of the prevailing market conditions in India. Thirdly, acknowledging the similarity in issues, Google itself referred to decisions of foreign authorities in its submission. E.g., while contesting the market delineation, Google relied on Epic Games v. Apple (Epic Games v. Apple), United States District Court, Northern District of California, Case No. 4:20-cv-05640-YGR, September 10, 2021. 205. The Commission notes that Play Store is by far the most important app....
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....f any participating bank), merging several banking features, seamless fund routing & merchant payments into one hood. It also caters to the "Peer to Peer" collect request which can be scheduled and paid as per requirement and convenience. Furthermore, UPI offers a uniform architecture for enabling users with bank accounts to send and receive money instantaneously (through their mobile devices) by use of a single identifier (a UPI ID) and without having to share bank account details, while transferring money. The UPI ecosystem is designed for banks and only a banking entity can directly interact with the UPI switch. However, non-banking entities can also participate by partnering with a banking entity which is already on UPI platform, and developing their own APIs referred to as third party applications (apps) e.g., Paytm, PhonePe etc. Such entities who provide UPI services by partnering with banks, such as G-Pay, PhonePe, Amazon Pay, Paytm etc. are generally referred to as Third Party Application Providers ('TPAPs'). 208. In this relation, it is apt to mention here about the participant(s) in UPI ecosystem: * NPCI: NPCI is the network operator, service provider and coor....
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....ments like credit & debit cards, mobile wallets, internet banking, etc. Google claims that its UPI app i.e., GPay competes with various other digital payment methods. As per Google, these services are substitutable when it comes to purchase of digital content on the Play Store. 212. The observations of the Commission in this respect are as follows: a) Substitutability between cash payment and digital payment 213. As noted by the DG, cash-based payments are manual and prone to inefficiencies and fraud. Whereas digital payments with the development of information technology and the wide adoption of smart devices offer possibilities to simplify the transactions. Digital payments are more secure as well as easier to handle as compared to cash payments. 214. Thus, the Commission concurs with the finding of the DG that digital payments and cash payments are not interchangeable. b) Substitutability between UPI and other methods of digital payment 215. The DG has succinctly brought on record the distinctive features of various digital payment methods vis-à-vis that of UPI apps. These are discussed below: UPI versus debit/ Card 216. The differences between UPI....
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....ectronic Fund Transfer (NEFT), Real Time Gross Settlement (RTGS), Immediate Payment Service (IMPS), etc. 220. A major difference revealed by the Investigation, between UPI and the money transfer services discussed above is the convenience and ease that UPI gives a customer compared to the above. A short comparison between UPI and these money transfer services has been done below: 220.1. Payments made through UPI are real time payments that can be instantly made 24x7 whereas RTGS is not a 24x7 system. The RTGS service window for customer transactions is available 7 am to 6 pm on a working day, for settlement through the RBI. However, the timings that the banks may accept RTGS may vary from bank to bank; 220.2. NEFT is a fund transfer system in which the transactions received up to a particular time are processed in batches every half hour. Whereas through UPI, a user can make a request for payment from another UPI user, which is then settled instantly. IMPS does not provide for payment collection services. This is because UPI provides for a Peer to Peer (P2P) "pull" functionality. 220.3. UPI provides for payments through virtual payment addresses and QR....
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.... as it is currently not possible to transfer money from one wallet to another. On the other hand, UPI payments can be made across different service providers based on a unique identification. 223.4. UPI is more secure than a mobile wallet as wallets mostly rely on a phone's locking system for security. Wallet based transactions typically do not require any tiered security measures. This essentially means that a third party could potentially illegally transfer funds merely through accessing a smart mobile device. On the other hand, UPI provides a two-factor authentication, which provides a secure and convenient payment experience to the user. 224. On the basis of the above analysis, it can be concluded that there is no substitutability between UPI enabled digital payments apps and mobile wallets. 225. In relation to substitutability between UPI vis-à-vis cash payments and digital payments, it is apposite to refer to submissions of few app developers in fintech space, as follows: 225.1. Amazon Pay Private Limited stated that though there are multiple modes digital payment, but UPI has additional advantages over others in terms of better security architect....
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....lude: (i) for banks - single click two factor authentication, a universal application for transactions, it leverages existing infrastructure, it is safe and secure, the payment basis is a single/ unique identifier, and it enables seamless merchant transactions; (ii) for customers: - round the clock availability, single app for accessing different bank accounts, no requirement for credential sharing, single click authentication, and ability to raise complaint directly through the UPI app; and (iii) for merchants: seamless fund collection from customers through single identifiers, no risk of storing customer's virtual address like in cards, access to customers that do not have credit/debit cards, suitability for ecommerce and m-commerce transactions, resolves the cash on delivery collection problem, and enables in-app payments with ease." 225.3. PhonePe described how the UPI is distinct from other modes of digital payment and listed its benefits. In its submission, detailed workflow adopted by users to make digital payment was elucidated along with limitations associated with each mode of digital payment in terms of funds transfer limits, frequ....
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....; and * NEFT and RTGS transfers require the input of details of the payee's bank account number and other details, in comparison to UPI which works on the basis of a simple VPA. Additionally, transactions have a wait time of 30 minutes for payments to new payees, which is not the case with UPI transfers. RTGS * RTGS is meant for large transfers and has a minimum transaction requirement of INR 2 lakhs. This makes it very different and distinct as compared to UPI transactions; and * UPI payments are much faster and can be utilised around the clock by users sending and receiving money, unlike RTGS which is routed through the RBI; NEFT * NEFT is an electronic system of fund transfers which operate on a Deferred Net Settlement basis - i.e.,, transactions made through NEFT are settled in batches. Accordingly, in NEFT, any transaction initiated after a designated settlement/cut-off time would have to wait till the next designated settlement time. UPI, on the other hand, happens on a real time and continuous basis. Therefore, the two modes are not comparable. Net Banking IMPS: * To make a net banking IMPS transfer,....
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....the above, National Payments Corporation of India also enlisted benefits provided by UPI to different stakeholders i.e., banks, end-consumers and merchants. It was stated that UPI ecosystem enables more secure and quick transactions through single click two factor authentication, no requirement to store consumer details, round the clock availability, quick grievance redressal mechanism, interoperability across platforms and feature to link multiple bank accounts to single digital identity. The relevant extracts from the submission are reproduced here under: Benefits for banks: i. Single click two factor authentication. ii. Universal Application for transactions. iii. Ability to leverage existing infrastructure. iv. Safe and secure transactions. v. Payments on the basis of unique Identifications. vi. Enable seamless merchant transactions. Benefits for end consumers: i. Round the clock availability. ii. Single Application for accessing different bank accounts. iii. Use of Virtual ID without credential sharing, such as card number, account number; IFSC etc. iv. Single click auth....
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....e, it would be relevant to re-produce the related statistics: 230. The aforementioned graph^12 shows that the value of UPI based digital payment from financial year 2017 to 2021 has seen a steep rise i.e., from INR 69.5 billion in FY 2017 to INR 41039.58 billion in FY 2021. Since April 2016, UPI has become synonymous to a rapid digital payment which has seen an exponential growth trajectory to cross over 200 cr transactions a month. This is further expected to grow 10x over the next 3 years^13. In FY 2018-19, UPI accounted for 17% of the total 31 billion digital transactions in the country. The next fiscal year saw UPI's share rising to more than 27% as it processed 12.5 billion transactions of the total 46 billion digital transactions. In FY 2020-21, UPI accounted for 40% of the total 55 billion digital transactions^14. As of August 2021, UPI has 22+ crore users who did 3.5 billion financial transactions in August, aggregating to a settlement value of 6.39 lakh crore . The same is represented graphically as under: 231. Based on the foregoing analysis, the Commission is of the view that relevant product market in the instant matter can be defined as 'market for apps facilitat....
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....(including predatory price) of goods or service. Explanation.- For the purposes of this clause, the unfair or discriminatory condition in purchase or sale of goods or service referred to in sub-clause (i) and unfair or discriminatory price in purchase or sale of goods (including predatory price) or service referred to in sub-clause (ii) shall not include such discriminatory condition or price which may be adopted to meet the competition; or (b) limits or restricts- (i) production of goods or provision of services or market therefor; or (ii) technical or scientific development relating to goods or services to the prejudice of consumers; or (c) indulges in practice or practices resulting in denial of market access in any manner; or (d) makes conclusion of contracts subject to acceptance by other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts; or (e) uses its dominant position in one relevant market to enter into, or protect, other relevant market. 238. Based on the allegations against Google, the DG has identified 3 dif....
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....ations i.e., (i) mandatory use of Google Play Billing System (GPBS); and (ii) charging high service fee of 15-30% from App developers. 242. The DG based on its investigation has concluded that conduct of Google amounts to violation of the provisions of Section 4(2)(a)(i), Section 4(2)(a)(ii), Section 4(2)(b), Section 4(2)(c) and Section 4(2)(e) of the Act. Google on the other hand has contested the findings of the DG. 243. The Commission has perused the Investigation Report, response of the Parties thereon and material available on record. The observations of the Commission on this issue are detailed in succeeding paragraphs. 244. At the outset, the Commission notes that for distributing an app through the Google Pay Store, an app developer is required to agree to the terms set out in the Developer Distribution Agreement (the DDA) and, under the DDA, the Developer Program Policies (the DPP). Further, if the app developers want to distribute paid apps or enable in-app purchases, they also need to agree with the Google Payments Terms of Service-Seller (IN). Therefore, following three main documents contain the terms and conditions which govern relationship between Google and....
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....ccepting payment for access to in-app features or services, including any app functionality, digital content or goods (collectively "in-app purchases"), must use Google Play's billing system for those transactions..... Examples of app features or services requiring use of Google Play's billing system include, but are not limited to, in-app purchases of: * Items (such as virtual currencies, extra lives, additional playtime, add-on items, characters and avatars); * subscription services (such as fitness, game, dating, education, music, video, service upgrades and other content subscription services); * app functionality or content (such as an ad-free version of an app or new features not available in the free version); and * cloud software and services (such as data storage services, business productivity software, and financial management software). (Emphasis Supplied) 249. Google Play's Payments Policy is a part of Google's mandatory Developer Program Policies and Developer Distribution Agreement which have to be agreed to by all app developers who want to list their app on the Play Store, without any scope for changes / negoti....
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.......all developers selling digital goods and services in their apps are required to use Google Play's billing system. Any existing apps currently using an alternative in-app billing system will need to remove it to comply with this update."^20 (Emphasis Supplied) 253. Therefore, if app developers do not comply with Google's demand of using Play Store's payment system (i.e., Google's Play Store Billing and In-App Billing System), they are not permitted to list their apps on the Play Store, and therefore, will not be able to access potential customers using Android based smart devices, which is not a feasible option for any app developer. 254. Further, the app developers cannot not lead users to an alternative payment method other than GPBS within an app distributed on Google Play.^21 In particular, (W)ithin an app, developers may not lead users to a payment method other than Google Play's billing system unless permitted by the Payments policy. This includes directly linking to a webpage that could lead to an alternate payment method or using language that encourages a user to purchase the digital item outside of the app.^22 Relevant extracts of the Section 4 of Google Pl....
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.... purchases of digital goods or subscriptions. The Investigation has revealed that as on 06.01.2022^23, this service fee is as under: 257.1. From 01.07.2021, service fee is 15% for the first USD 1 million of earnings for all App developers enrolled in the 15% service fee tier. 257.2. Service fee is charged @ 30% for earnings in excess of USD 1 million each year. 257.3. For developers not enrolled in the 15% service fee tier by 01.07.2021, the service fee of 30% applies until enrolment has occurred. 257.4. From 01.01.2018, Google lowered its fee for subscriptions to 15% for subscribers who maintained a subscription service for more than 12 months. However, w.e.f. 01.01.2022 - Google announced that from this date the service fee for all subscription products will be 15%. 258. Further, the policy update (announced on 16.03.2021 and applicable from 01.07.2021), require App owners/developers to enroll in the 15% service fee tier in order to avail this discount of 15% on the 1st million dollars (USD) that they earn in a year.^24 Also, the App developers are required to have an "Account Group" whereby all the Associated Developer Accounts will be noti....
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....est a 6-month extension, which will give them until 31.03.2022 to comply with the Payments policy. 5. 21.10.2021^31 Service Fee on subscriptions reduced from 30% to 15%, further reduction of service fee on audio, video streaming services from 15% to 10% 6. 10.12.2021^32 Enforcement of mandatory use of GPBS extended till 31.10.2022 for Indian developers 262. Relevant excerpts from the announcement made on 10.12.2021 are as follows: "...In 2020, we clarified the language in our Payments policy to be more explicit that all developers selling digital goods and services in their apps are required to use Google Play's billing system. Apps using an alternative in-app billing system will need to remove it in order to comply with the Payments policy. We always strive to work with our developer community to help keep their apps on Play while they make any needed changes. While most developers have already complied with this long-standing policy, we gave a one year grace period for any that needed to make changes to their apps. Based on developer feedback, we gave eligible developers the option to request an additional six months, giving them more than 1....
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....nt at different points of time when Google revised the DDA. The Investigation has concluded that Google has gradually increased the scope of the mandatory requirement of use of its own payment/billing system (currently GPBS) by explicit additions in the policy. 266. The Commission notes that Google Play's Payments Policy which is a part of Google's mandatory Developer Program Policies, have to be agreed to by all App developers who want to list their app on the Play Store, without any scope for changes / negotiations. Google's Payment Policy specifically provides that developers charging for apps and downloads from Google Play must use Google Play's payment system, i.e., GPBS for both paid app downloads as well as IAPs. If App developers do not comply with Google's demand of using GPBS, they are not permitted to list their apps on the Play Store. 267. On account of the mandatory applicability of the GPBS, the App developers would not be able to use the payment processing system of their choice for facilitating app purchases and in-apps purchases of digital products. 268. As already noted, Google's Android is the most widely used smart device ecosystem in the country (with ....
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....gle are as follows: "..All apps, including Google apps, are subject to the same set of rules and policies. In December 2020, Google announced a clarification of its billing policy to make clear that apps that sell access to digital content or services must use Google Play's billing system. Developers not already in compliance were given a grace period until March 31, 2022 to comply********..." ************************* ************************* ... 11. As explained above, Google's own apps generally already use Google Play's billing system. Google will require those Google apps that do not already use Google Play's billing system to make the necessary updates. ***********" 271. In this regard, it is also relevant to note the submissions of ShareChat, the relevant extract of which is reproduced below: "An even more egregious distortion of the market is in the context of our Moj App, which is a short-video platform where users are able to create, share and view videos. One of the major competitors of Moj is YouTube, the video sharing platform owned by Google. It is industry practice for video sharing platforms to institute some form....
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....Google has not subjected its own app to the conditions and service fee, as being forced upon the other apps. These discriminatory practices result in competitive disadvantage to the competitors of Google in the downstream market, by increasing their cost. 273. The discriminatory practices directly harms the app developers as it increases their costs and is exploitative for the App developers and App users in India. The App developers have two choices, either to absorb this increased cost or to pass on the increased cost on to the end users of their apps. If app developer absorbs the increased cost, it affects their margins and leaves lesser amount to be spent on research and development activity for improvement of the quality of their apps. Decrease in the quality of apps directly harms the consumers as they will get lower quality at same price. Moreover, lesser investment in innovation also affects the ability of App developers to effectively compete in the downstream markets. If the app developer chooses to pass-on the increased cost of apps to the app users that will directly harm the consumers as they have to pay higher price for the same services, consequently consumers wil....
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....their choice, such as App Annie, or by the developer themselves. In addition, app developers can collect within their app user data for their own purposes and analyse that data on their own and/or outsource the analysis to third party providers. 18. Google collects certain statistics and data that are also shared in part with developers through the Play Console: a. Device information and when the device has accessed Google's systems; b. In-store user activities (such as searches, listing impressions, and preregistration requests); c. User information (such as registered country and language preference) and user-triggered events (such as installs, updates, uninstalls, and purchases); d. Subscription initiation and state (such as total, new and cancelled subscriptions, along with revenue details); e. User-generated ratings and reviews; f. App usage information (such as app opens, game achievements, scores, and other developer-nominated events); g. App technical performance data (such as crashes, ANRs, stack-traces, Apps size, and security vulnerabilities); h. Depending on a user's privacy settings, Googl....
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....n data along with other data, Google is in a position to distort competition in the downstream markets by setting rules for controlling the whole process of development and distributions of apps. 279. The Investigation has also approached certain app developers in the music streaming which compete with Google's YouTube music streaming services. The relevant replies are reproduced below: 279.1. Hungama has stated that, "A competitor having access to our customer data is not desirable as these users could be directly targeted by Google with their own product & services aimed at making such users download similar Google apps For e.g. Since Google owns the Play store & also makes Google Play Billing as the default option to collect payments for subscription, now it has information of all Freemium & Premium users, Google could use this data to target the premium users with their own product with a pricing aimed at attracting these users." 279.2. Jio Saavn has stated that, ******************* ******************* ******************* ******************* ******************* ******************* 279.3. Gamma Gaana has stated that, ******************* ....
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....ity and activity on third-party sites and Apps that use Google's services. Further, Google uses this data to provide personalised services, including content and advertisements. 9. It is unclear whether such data would be shared with Disney+ Hotstar. However, access to such data will likely allow Google to improve the offerings of YouTube, which is a competitor of Disney+ Hotstar, to provide customized products and services, and targeted advertisements..." 281. The Commission is of the view that by having control on the data, Google is in a position to put its competitors in a disadvantageous position in the downstream markets. An app developer who is selling its app through Google Play Store is not in a position to have access to the data generated by its own app. However, Google being in control of Android OS and Play Store is not only able to have control to the data which is primarily generated by a third-party app provider but also in a position to decide whether to share selectively or not to share the same with the App developers. The Commission is of the view that access to this user level transaction data would be useful for the app developers as they would....
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....xtracts from the reply of Google, in this regard, are as follows: Q. 2(vi) What is the payment settlement time-period with app developers in India after Google receives a payment? Reply: "The payouts for Google Play developers are initiated on the 15th day of each month for the previous month's sales. However, payout schedules may vary depending on the developer's product and the payment threshold set by a developer in its payment profile." "...Q.2(xvi) In response to query 2(vi) sought vide notice dated 24.06.2021 you have stated that the payout for Google Play developers are initiated on the 15th day of each month for previous month's sales. Please explain the rationale for the same. Also, provide copies of internal communication including emails, presentations, minutes of meetings related to the decision to use this timing for payment to app developers. Reply: "8. Invoices are paid on the 15th of each month as Google uses a monthly payment system for the payment of invoices and accounting. A number of businesses and employers globally choose the 15th of each month as the date for payment as it is around the middle of each calendar mo....
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....pers from the date of transaction the payment. The Investigation perused the RBI Guidelines dated 24.11.2009 for settlement of payments electronic payment transactions involving intermediaries. As per these guidelines, the payments to merchants which do not involve transfer of funds to nodal banks shall be effected within a maximum of T+2 settlement cycle (where T is defined as the day of intimation regarding the completion of transaction). Further, all payments to merchants involving nodal banks shall be effected within a maximum of T+3 settlement cycle. 290. On the basis of foregoing analysis, it is noted that Google receives the payments within a shorter and strict deadline from the payment aggregators. However, Google fails to observe such strict timeline when it comes to making payment to app developers wherein the payments are released after a gap of 15 to 46 days from the day of the transaction. If the app developers would have freedom to choose a payment processor of their choice, they would be able to receive payments (after deducting payment processing charges) in much shorter time limit as prescribed by RBI. Notwithstanding, the Commission observes that Google has not....
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....4.1. Paytm has submitted that, "Yes, Paytm does consider Google as its competitor in the collection of payments from users of apps on smart mobile devices in India. Google is building a closed wall payment ecosystem for apps which accept payments in the form of paid app downloads and inapp purchases (IAP/s) on the Play Store. This closed wall ecosystem, is particularly detrimental to competition in the PG space, since apps involve a direct engagement between the app developer/merchant and users (particularly with respect to IAPs where there is no involvement of app stores such as the Play Store). Therefore, if through this closed wall ecosystem wherein app developers are only allowed to process IAPs through the app store's own payments system and no other PGs, then PGs would lose all their app related business, as in any event in the case of paid app downloads, the engagement is between the app store and the user wherein the app developer is not involved. While doing so, Google is benefitting from the hefty commissions that it earns from paid app downloads and IAPs (discussed in greater detail below)." (Emphasis Supplied) 294.2. Razorpay has submitted that, ....
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..... Further, as already elaborated, Google's Play Store provides an un-parallel reach to the Android users, amongst all Android app store in India. The Play Store is thus a critical app distribution channel for app developers to reach to vast pool of Android users through a single window. It is the only viable distribution channel available to Android app developers in India. If a developer wants users to discover and download its app, that app must be on the Play Store. The Play Store's market share in combination with the network effects insulates it from competing Android app stores. In order to access this 'must have' distribution channel, the app developers would have to agree to the onerous conditions being imposed by Google viz. mandatory use of GPBS. Android app developers have no choice but to use this essential distribution channel to reach app users in India, giving Google the ability to impose restrictions and indulge in anti-competitive conduct such as requiring the exclusive use of GPBS. If the app developers do not agree to the policies of Google, they cannot list their apps on the Play Store and thus, denied access to the market. 297. The Investigation has furt....
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....or which users transacted with Google play billing system in India. By no stretch of imagination, these many apps can be considered to be insignificant. Millions of Indian users will be using these apps and transacting with them through GPBS. With the upcoming mandatory imposition of GPBS w.e.f. 01.11.2022, the said numbers are going to increase multi-fold. Thirdly, as already stated above, in the year 2020, the number of apps which were using GPBS was only *******of the total apps which are either paid or contain in-app purchases and thus, the remaining 80% of such apps, would be required to mandatorily use GPBS going forward. Averments of Google 300. Google has submitted that the requirement to use GPBS does not result in a denial of market access, limit technical development or amount to leveraging. The averments made by Google, while contesting the findings of the DG are summarized below: 300.1. Users and developers benefit from a safe and uniform billing system. As a safe billing system, GPBS helps Google to protect users. A secure billing system increases user trust and willingness to buy online, which helps increase revenues for app developers. Further, GPBS a....
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....le Play, developers have access to all the necessary data to innovate and compete effectively. Google Play provides access tools, programs, and insights that helps developers reach and engage users so they can grow their apps and games. Google also provides information in relation to user payment data. Google collects information regarding users' subscription cancellations, and developers are able to view summaries of this information - including their reasons for unsubscribing - through the Google Play Console. 300.7. There is no violation of Section 4(2)(e) of the Act because Google does not leverage its alleged dominance in the markets for licensable mobile OS and app stores for Android OS. As noted above, developers have several alternative options to distribute their apps on Android devices, if they do not agree with Google Play's policies and thus, do not wish to distribute through Google Play. 300.8. Google's link-out provisions contained in the Payments Policy do not operate as described in the Investigation Report. Google's link-out provisions contained in the Payments Policy, restrict apps' ability to "linkout" to payment systems other than GPBS, includi....
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....r complementary software or services. Play Store constitutes the main distribution channel for apps on the Android mobile ecosystem, which allows its owners to capitalize on the apps brought to market. While there are other app stores that may be available on Android OS mobile devices, Play Store is by far the largest app marketplace connecting app developers with users on Android ecosystem. Google's control over Play Store, the critical gateway between app developers and users, gives it the power to dictate terms to app developers, and compel them to mandatorily use its own payment system. 304. Google claims that GPBS provides a safe billing system which helps Google to protect users. The Commission notes that these arguments of Google are completely devoid of merits primarily for two reasons. Firstly, various digital payment processing solution providers in the country, operating under the regulatory framework prescribed by Reserve Bank of India, are providing safe and secured channel for processing digital payments. Secondly, Google itself employs few of these payment processors at the backend to process payments in the Play Store and Google has not presented any evidence as ....
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....ly adds to the competitive advantage of Google's own apps as by having its payment system process all in-app transaction, Google gets access to critical and competitively relevant transaction/consumer data of all its rival apps. Google being in control of Android OS and Play Store is not only able to have control to the data which is primarily generated by a third-party app provider but also in a position to decide whether to share selectively or not to share the same with the app developers. 308. ADIF in its submission states that Google uses its control of the Android Appstore ecosystem inter alia to confiscate the entire user relationship. This confiscation results in Google having access to a vast amount of extremely valuable user data that Google is then able to exploit. While, Google does get data on app downloads, but it does not get any financial data on transactions within the app done using non GBPS payment systems. With mandatory usage of GPBS, Google will get details of all transactions- amounts, frequency etc, across all apps, thus enhancing Google's ability to track, profile and target users and giving them an unfair advantage over all other companies. 309. ....
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....r data that can allow it to outcompete them and second also further cement its position in the online target advertisement. 311. It is Google's argument that the fee charged is essentially the distribution fee/service fee for the services they provide to the apps for their in-app purchases and not as a transaction/bill processing fee. Therefore, the processing fee charged by the other payment gateways/ payment processing systems is not the right comparator to assess the reasonability of the fee charged by Google. It is observed that despite the service fee not being a bill payment processing fee, as claimed by Google, Google has started levying the fee simultaneously with the implementation of its policy of mandatory use of GPBS by the apps. It is only when the apps were asked to mandatorily use the GPBS is when the fee was also levied on them. The strategy to delink the two rather appears to be an afterthought in response to the regulatory developments in various jurisdictions. Be that as it may, if the commission/service fee is to be paid by the apps is indeed for the services that they avail from Google Play for in-app transactions, it was incumbent on Google to first provide....
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....w that Google has violated Section 4(2)(a)(ii) of the Act. 313. The Commission also concurs with the DG that Google's restrictions for mandatorily using GPBS also have significant negative effect on the improvements and innovative solutions that third party payment processors / aggregators would be able to bring to the market. It takes away the incentives and ability that such payment aggregators would have to innovate in payment solutions designed for IAPs, by restricting their entry into this market. Further, mandatory imposition of GPBS also discourages app developers from developing its own in-app payment processor especially the free download apps that contain in app purchases in India. Moreover, as already elaborated earlier, Google provides a truncated access to the app developers to the trove of data collected from the apps/ Play Store, while retaining full control over such data for monetization on commercial basis. These practices distort competition and disturb innovation incentives as well as ability of the app developers to undertake technical development and innovate in their respective sphere of business activities. Thus, the Commission is of the view that the pra....
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....t agree to mandatory use of his GPBS. Thus, the Commission finds that the practices followed by Google results in denial of market access for payment aggregators as well as app developers, in violation of the provisions of Section 4(2)(c) of the Act. 316. The Commission further notes that by charging high fee from the competing apps and not charging from its own apps Google is able to increase the cost of its competitors in the downstream markets. Further, by having control on the data, Google is in a position to put its competitors in a disadvantageous position in the downstream markets. Moreover, unlike the industry practice of making payment in 2-3 days, Google provide itself a leeway to make the payment to the App developers after a gap of 15 to 46 days from the date of the transaction. This conduct of Google also put the competing apps in the downstream market in disadvantageous position (as already discussed) 317. Google claims that app developers have several alternative options to distribute their apps on Android devices, if they do not agree with Google Play's policies and thus do not wish to distribute through Google Play. The Commission is of the view that these th....
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....h is levied on per transaction basis and the same varies as per the method/form of payment used. E.g., when the payment transaction is made through a credit card or debit card or net banking, the transaction fee charged by the Payment Service Providers differs in each case. In case of payments processed through UPI, the fee is 0%. 319.5. Therefore, the service fee charged by Google for providing the payment processing services is exorbitantly higher than the fee charged by other players for the competing services in Indian market. 319.6. Google doesn't provide any additional service to App developers which have in-app purchase option. Thus, Google is charging service fee without providing any additional services to the App developers. 319.7. Service fee imposed on App developers by Google is not negotiated. 319.8. Google is able to charge exorbitantly high fee from App developers because of unavoidable dependence of App developers on Play Store for distribution of their apps to Android users in India. 319.9. Accordingly, the DG found that charging of 15%-30% fee by Google is excessive and therefore unfair in terms of Section 4(2)(a)(ii) ....
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....t the Google Play service fee model ought to be. This would amount to the Commission acting as a price-setting regulator, which it has consistently found is not its role. 320.6. Google Play has adopted a fee structure that is fair, reasonable and competitive with other digital content distribution channels, and is intended to maximize the benefits to all stakeholders in the Google Play ecosystem. Under Google Play's fee structure, the overwhelming majority of developers (97%) pay only a nominal registration fee of USD 25 to access Google Play. 320.7. Google charges a service fee only when developers charge users a price for apps downloaded through Google Play or in-app purchases of digital content in apps downloaded through Google Play. This structure allows developers to avoid up-front costs when distributing their apps on Google Play, and aligns Google's success with the developers' success, in that Google only receives a fee when app developers generate revenue. Through this business model, the majority of developers (especially new developers trying to build a user base) can access Google Play's app development tools, the distribution channel and the broader e....
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....ards the costs of processing payments. The other services offered by Google Play and GPBS account for the majority of the service fee. This alone demonstrates that (i) the other services provided by Google are unrelated to payment processing and are thus used by all developers; and (ii) the fee of 30% is ex facie unreasonable and excessive given that the cost of payment processing comprises a minor proportion of the total fee. 321.5. By requiring only 3% of apps to subsidize all other apps on the Play Store as well as Google's costs for operating the entire Play Store, Google imposes an unfair, discriminatory, and unlawful fee structure on app developers offering digital goods/services. 322. Another connected issue highlighted by Match Group in its submission is that of selection of category of apps on which service fee is imposed by Google. As already stated, service fee of Google is applicable on apps offering digital content. Match Group in this regard has submitted that Google's distinction between apps offering digital content in comparison to those offering physical goods or services is arbitrary. Ride sharing apps such as Uber and Ola, offer a digital platform co....
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....Google Play are subject to a service fee. Even with-in this 3%, a limited number of apps are subjected to a service fee of 30% and others pay a service fee of 10% of 15% depending on various parameters. Going by these assertions of Google, it is noted that the monetization model of Google is based on cross-subsidization by Google where the 3% of the apps offering paid apps or IAPs are made to bear the entire cost of the Play Store, even though all the apps are using similar services of the Play Store. Therefore, the question to be determined is whether it is reasonable and fair for these 3% of the apps to bear the 100% cost of the Play Store. In the same vein, the Commission also notes that amongst these 97% are those apps also, which have significant business operations but are not contributing towards recoupment of Play Store costs, directly through service fee. The Commission also notes that Google has other revenue streams also from the 'free apps' listed on Play Store, in the form of advertisement related revenue earned by Google from the apps hosted on Play Store and otherwise. These revenue streams are also contributing towards recoupment of the costs associated with Play St....
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....UPI apps as one of the effective payment options in the Google Play's payment system. 54. In relation to the second allegation related to exclusivity given to Google Pay, it is noted from the Information provided by the Opposite Party that Google Pay has been integrated with intent flow methodology whereas other UPI apps can be used through collect flow methodology. In regard to difference between collect flow and intent flow, the Opposite Party has admitted that there are differences between these flows on Play (though claimed to be minor and not competitively significant). Google has stated that both flows involve the user transitioning from Play, to the UPI payment app, and back again. This transition is automated in the intent flow, whereas the same is required to be manually undertaken by users in the collect flow. ........ Therefore, it becomes critical to examine whether such difference in the process, favoured Google Pay to the disadvantage of other competing apps. Further, given the apparent better user experience for intent flow, it also needs to be examined whether Google allows other UPI based payment apps to be integrated using intent flow...." (Emphasis ad....
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....bservations of the Commission are elaborated in succeeding paragraphs. 333. In order to assess the allegations in the matter, it is important to understand the differences between two methodologies used for integrating UPI apps in a payment platform. The DG has succinctly brought on record the differences between intent-flow and collect-flow methodology of payments on UPI. In this context, it would be useful to refer to reply filed by NPCI, wherein it has differentiated collect flow and intent flow technology. The relevant extracts of the reply of NPCI are reproduced below: ********************** ********************** ********************** ********************** 334. Further, the differences in the two methodologies can also be tabulated in the following manner (on the basis of Information provided by NPCI): Sr. No. Activity Intent Flow Collect Flow 1. ***** *********** *********** 2. ***** *********** *********** 3. ***** *********** *********** 4. ***** *********** *********** 5. ***** *********** *********** 6. ***** *********** *********** 335. The Investigation has ....
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....e., other UPI Apps. Intent Flow Collect Flow 338. It is noted from the above screenshots that paying for an app on the Play Store's payment page with a non- Google Pay app is inconvenient, involves more steps, and the user also has to change forums/ apps (i.e., switch from Play Store to the other app (for instance Paytm app). Payment through a Google Pay UPI ID has deliberately been made much faster, simpler and does not require the user to switch between forums/apps. The Investigation has further revealed that this situation would be further aggravated in case of in-app purchases (IAPs) as the user will have to change three forums i.e., the app, the Play Store's payment page and the UPI app. 339. In this regard, it is noted that in the year 2019, *********of the UPI transactions in Play Store ware carried on through GPay UPI App, while *********and *********of such transaction were carried out using PhonePe and Paytm UPI Apps, respectively. Whereas, in year 2020, *********of the UPI transaction in Play Store in the year 2018 was carried on through GPay UPI App, while ********* and *********of such transaction were carried out using PhonePe and Paytm UPI Apps, respectiv....
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....ferior to the other. 342.1.4. **************** The Investigation Report is therefore wrong to allege Google discriminated against third party UPI apps by actively refusing to support such apps on intent, or actively requiring such apps to use collect. 342.2. As per Google, in order to establish an infringement of the Act, the Investigation Report must have demonstrated that Google's alleged conduct had anticompetitive effects on rival UPI apps. The Report finds that GPay's share of UPI payments on Google Play was higher than its share of overall UPI payments, which the Report finds was "clearly arising from its [Google] giving preference to its own UPI App [in Google Play]". The Report is wrong to draw such a conclusion and the same is based on mere inference. There may have been many other reasons why GPay was more frequently used on Google Play than other UPI apps (e.g., users may have trusted that GPay would be as safe and secure as Google's other services in Google Play). The Report cannot assume that this was because of GPay's integration with the intent flow (without providing correlating evidence, which it does not). 342.3. The Investigation R....
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....r in the app store for Android OS, has a special responsibility that access to its platform are available at non-discriminatory terms for all trading partners. Simply because, Google pay UPI app is an in-house app, does not grant Google any right to self-preference and offer dissimilar treatment to other competing UPI apps. The Commission is of the view that the justification advanced by Google and the classification criterion for discrimination is wholly arbitrary, artificial and evasive. It only seems to be an afterthought on the part of Google. 345. Instead of relying on any evidence, Google has simply assumed *********** Further reliance placed by Google on the fact that it was in compliance with NPCI guidelines by allowing integration to other competing UPI apps through collect flow is also misconceived. NPCI as the umbrella organization has prescribed certain norms for integration but it is not the case of Google that NPCI guidelines restricted Google from offering intent flow integration to the competing apps. Google could have very well provided integration following intent flow methodology in view of the better experience. However, Google followed differential treatment....
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....the Act which, inter alia, provides that there shall be an abuse of dominant position if an enterprise directly or indirectly "imposes" unfair or discriminatory condition/ price in purchase or sale of goods or services. The moment there is any imposition of any unfair or discriminatory condition by a dominant player, the statutory prohibitions shall trigger. The same is true for other instances of abuse as enshrined in Section 4(2) of the Act as well and the same also have to be read in this manner, which is consistent with the avowed objectives of the Act, as highlighted above. 348. The Commission also observes that Section 32 of the Act which deals with "Acts taking place outside India but having an effect on competition in India", clearly inter alia provides that the Commission shall notwithstanding that any enterprise abusing the dominant position is outside India, have the power to inquire into abuse of dominant position by such player if such dominant position has or is likely to have an appreciable adverse effect on competition in India. That being the statutory scheme in respect of anti-competitive acts taking place outside India, there cannot be any higher threshold for....
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....the smart mobile devices. Thus, Google becomes the gateway to Android smartphones due to dominance in the markets for licensable mobile OS and app stores for Android OS. Thus, by giving a better experience to users through intent follow integration for its own UPI app, Google is in a position to drive up its customer base. Given the interoperability offered by UPI ecosystem, generally the user does not multi-home and uses only one UPI app. Once the user starts using Google Pay UPI app for the Play Store, the natural tendency for the user is to stick to same app for other payments also. In this regard, it is pertinent to note that Google (with a market share of 34%) occupies the second position in the overall UPI market just behind PhonePe (with a market share of 46%) and Paytm is distant third at 11%. 353. To summarise, the Investigation has revealed that the intent flow technology is superior and user friendly than collect flow technology, with intent flow offering significant advantages to both customers and merchants and the success rate with the intent flow methodology being higher due to lower latency. Collect flow is a broken chain of steps, which requires that the custome....
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....ss to competing UPI apps since the market for UPI enabled digital payment apps is multi-sided, and the network effects will lead to a situation where Google Pay's competitors are at a competitive disadvantage in the long run. When the usage and downloads of other UPI apps reduce, not only will such apps lose the incentive to innovate, but they will also lose the capability to innovate as they would not be able to collect user data to understand consumer preference, which would in the long term make the app irrelevant. 357. Further, being the gateway to Android smartphones due to dominance in the markets for licensable mobile OS and app stores for Android OS, Google is uniquely placed to (and is) leveraging this dominance in favour of Google Pay. These markets are closely related to each other as UPI is used as a method of payment (both for paid apps as well as IAPs on the Play Store). Accordingly, Google's imposition of collect flow technology on other UPI apps, while only allowing Google Pay to use intent flow technology for payments on the Play Store, amounts to leveraging of its position in the markets for the licensable of mobile OS and app stores for Android mobile to prote....
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....* *************************** *************************** 361. In relation to above averments of Google, the Commission notes that any regulatory action taken by NPCI would not absolve Google of the anticompetitive practices adopted by it. The competition should be allowed to flourish on merits. Issue 3: Whether pre-installation and prominence of Google Pay UPI App (GPay) by Google is in violation of Section 4(2) of the Act? 362. As per the Informant, Google encourages pre-installation and opting of Google Pay as the default payment option on new smart mobile devices using the Android OS at the time of initial set up. This will encourage the users to use Google Pay over other apps facilitating payment through UPI. Such preferential placement of Google Pay on Play Store drive the users to exclusively use Google Pay instead of looking for alternatives due to a "status quo bias". As per the Informant, given the dominance of Android and Play Store, the OEMs have no choice but to agree to the terms and conditions imposed by Google. The Informant alleged that the preinstallation and prominence of Google Pay amounts to the imposition of an unfair and discriminat....
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....ed the pre-installation Agreement with the various OEMs. 364.8. Google has submitted that the Google Pay UPI App was pre-installed on less than ****of the total mobile devices sold in India, in the year 2020. 364.9. None of the competing UPI apps have submitted any evidence to corroborate denial by OEMs for pre-installation of their Apps. 365. Based on the foregoing, the Investigation has concluded that: 365.1. Google has made Agreements with OEMs for pre-installation of G-Pay App (UPI App) and provide financial incentives through RSAs and PBAs. These Agreements do not prohibit pre-installation of competing UPI Apps. 365.2. Google Pay UPI App was pre-installed on about *****of the total mobile devices sold in India, in the year 2020. 365.3. Other UPI Apps such as PhonePe, Paytm, Amazon Pay etc. also have Agreements with OEMs for pre-installation of their UPI Apps and the same are pre-installed on mobile devices. These UPI apps also provides financial incentives to the OEMs for pre-installation of their Apps. 366. Accordingly, the Investigation did not find sufficient evidence to indicate that Google has abused its dominant position....
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....ence submitted by Google has resulted in a fundamental misunderstanding of Google's products and their functioning which, in turn, is reflected in the DG's faulty conclusions in the Report. 370. Google further claims that the Investigation Report selectively relies on the responses of biased third parties that ostensibly confirm the Informants' allegations and, at the same time, ignores the responses of other objective third parties whose evidence demonstrates that Google's conduct is not anticompetitive. 371. In this regard, the Commission notes that the assertions made by Google do not appear to be validated from perusal of the Investigation Report. Not only has DG incorporated the response of Google in the Investigation Report but has also forwarded the entire submissions made by Google before it to the Commission while forwarding the Investigation Report. It cannot be gainsaid that the role of the DG in the investigation process is that of fact-finding nature and at the stage of the investigation, the DG is not expected to embark upon any adjudicatory process. Be that as it may, the Commission has independently examined the entire material collected by the DG during the c....
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....collecting documents and evidence and to present its recommendations to the Commission based on their analysis. While conducting the investigation, it is neither requirement of the law nor any obligation of the investigator to consult each and every affected or interested participant. On careful perusal of the Investigation Report, the Commission is satisfied that the DG has contacted a cross-section of stakeholders including third parties and in this view of the matter, the allegations, and suggestions of bias in investigation as attributed by Google to the DG lack merit and are rejected. The Commission notes the submission of the Google that the DG has not consulted it "regarding the crucial and complex factual background surrounding the allegations", as thoroughly misconceived. It is on record that the DG has issued multiple probe letters to Google and the Commission is satisfied that Google was given sufficient and ample opportunities to present case during investigation. Even after investigation, Google has been provided with enough opportunities to present its objections and suggestions in the matter. 376. Google has further contended that the DG was unduly swayed by prior....
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....se of investigation. The reference to the prima facie order as made by the DG in the Investigation Report is only to understand the scope of investigation and such reference, by no stretch of arguments, be construed as swaying the independence of the recommendations made by the DG. In fact, if the argument of Google is taken to its logical conclusion, there can be no independent adjudication by the authority also (in this case, the Commission) after making a prima facie opinion while ordering investigation. 379. Google has also contended that that the DG posed leading questions to third parties in violation of various order of Courts which have held that a leading question to be one which "suggests the answer which the interrogator wishes or expects to receive, or which embodying a material fact admits of a conclusive answer by a simple negative or affirmative." Dobariya & others v. State of Gujarat, 2015 Cri LJ 3807, 17 April 2015 Reference was also made to the decision of the Hon'ble Supreme Court in Varkey Joseph v. State of Kerala, 1993 AIR 1892, April 27 1993 case and averred that leading questions violate the right to a fair trial enshrined under Article 21 of the Constitu....
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.... such reports for the limited purpose of understanding the issues in itself cannot be said to sway, much less vitiate, the conclusions arrived at by the DG. 383. Next, Google contended that the DG committed numerous contraventions of the principles of natural justice and failed to comply with the processes established under the Act. The DG did not grant Google the right to cross-examine witness testimony in the investigation process. The DG's denial of cross-examination on the ground that the findings are based on "analysis of written replies/submissions of various parties" is inconsistent with the accepted legal position. Google has been deprived of the right to test the veracity of the claims/ assertions made by the Informants and the third parties, including on such important issues as impact of Play's service fee. 384. Google has averred that Regulation 41(5) of the Competition Commission of India (General) Regulations, 2009 (General Regulations) provides that when a witness leads evidence, the other party (Google in the present case) should be afforded an opportunity to cross-examine the said witness giving such evidence. Further, right to cross-examination is not restri....
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....ce, if considered necessary or expedient. Hence, even when the evidence is led by oral submissions, the Commission or the DG retains the discretion to consider the request for grant of opportunity to the other party or parties to cross-examine the person giving the evidence if the same is considered necessary or expedient. Thus, the only issue which needs to be examined is when it would be necessary and expedient to grant an opportunity to the other party or parties to cross-examine the person giving evidence by way of oral submissions. It is not the case of Google that it is seeking cross-examination of a witness whose oral testimony has been recorded by the Google. As such, the request of Google for seeking cross-examination is not maintainable as per the statutory scheme. Google has been given ample opportunities to controvert the findings of the DG and accordingly, the Commission finds no substance in the grievance made by Google on this count as well. 388. Google further contended that under Regulation 20(4) of the General Regulations, the DG is under a strict obligation to include in the report all documents it has collected during its investigation. However, when the non-....
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....riminatory practices by not using GPBS for its own applications i.e., YouTube. This also amount to imposition of discriminatory conditions as well as pricing as YouTube is not paying the service fee as being imposed on other apps covered in the GPBS requirements. Thus, Google is found to be in violation of Section 4(2)(a)(i) and 4(2)(a)(ii) of the Act. 392.3. mandatory imposition of GPBS disturbs innovation incentives and the ability of both the payment processors as well as app developers to undertake technical development and innovate and thus, tantamount to limiting technical development in the market for in-app payment processing services. Thus, Google is found to be in violation of the provisions of Section 4(2)(b)(ii) of the Act. 392.4. mandatory imposition of GPBS by Google, also results in denial of market access for payment aggregators as well as app developers, in violation of the provisions of Section 4(2)(c) of the Act. 392.5. practices followed by Google results in leveraging its dominance in market for licensable mobile OS and app stores for Android OS, to protect its position in the downstream markets, in violation of the provisions of Sect....
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....ties. 395.5. 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. 395.6. 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. 395.7. 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). 395.8. Google shall not discriminate against other apps facilitating payment through UPI in India vis-à-vis its own UPI app, in any manner. 396. The anti-competitive clauses of different policies of Google, as identified in this order, shall not be enforced by Google, with immediate effect. 397. Google, however, is allowed....
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.... to allowing non-Google UPI apps to be integrated as per intent flow methodology, Google vide its submissions dated 01.08.2022, has stated that "...Google currently expects the integration of all transactions with the intent flow to be completed in the coming weeks...". Similarly, the pilot project for allowing user choice billing pilot for eligible and participating developers has been launched on a limited basis and the same has been extended to India w.e.f. 01.09.2022 i.e., after the receipt of the Investigation Report and oral hearing in the matter. 401. Further, the Commission notes that the objective behind imposition of penalties is: (a) to reflect the seriousness of the contravention; and (b) to ensure that the threat of penalties will deter the parties concerned from violating the provisions of the Act. Therefore, the quantum of penalties imposed must correspond with the gravity of the offence and the same must be determined after having due regard to the mitigating and aggravating circumstances of the case. Considering the totality of factors, the Commission does not find any reason to refrain from imposing penalty in the matter. 402. The plea rela....
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....' and the 'total turnover' of the enterprise. It would be more so when total turnover of an enterprise may involve activities besides production and sale of products, like rendering of services etc. It, therefore, leads to the conclusion that the turnover has to be of the infringing products and when that is the proper yardstick, it brings home the concept of 'relevant turnover'..." 404. Following the parameters set by the Hon'ble Supreme Court's as mentioned supra, the Commission now proceeds to determine relevant turnover and thereafter, would calculate appropriate percentage of penalty based on facts and circumstances of case. 405. Google filed written submissions dated 12.09.2022 on quantum of penalty which may be levied by the Commission in the event it is held to be in contravention of the provisions of the Act. Having considered the submissions made by Google on the potential penalties, the Commission vide its order dated 14.09.2022, directed Google to submit details of its turnover and profit generated or arising/accruing from India (including any of its group entities), from various revenue streams associated with Play Store (including advertising whether delivered/d....
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....ion and Results of Operations" contained therein, which was submitted by Google on 04.05.2022. Some of the important observations from the same re as follows: "Users' behaviors and advertising continue to shift online as the digital economy evolves." "Users are increasingly using diverse devices and modalities to access our products and services, and our advertising revenues are increasingly coming from new formats." "We generate our advertising revenues increasingly from different channels, including mobile, and newer advertising formats" "As online advertising evolves, we continue to expand our product offerings which may affect our monetization." "Google advertising revenues consist primarily of the following: * Google Search & other consists of revenues generated on Google search properties....and other Google owned and operated properties like Gmail, Google Maps, and Google Play.." "...We generate advertising revenues primarily by delivering advertising on Google properties, including Google.com, the Google Search app, YouTube, Google Play, Gmail and Google Maps; and Google Network Members' properties..." 40....
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....he Commission takes a serious note of such glaring inconsistencies and wide disclaimers in presenting various data points by Google. The Commission is constrained to observe that despite commanding enormous resources, Google has failed to provide the data in the manner sought by the Commission despite grant of sufficient time, as sought by it. Be that as it may, in the interest of justice and with an intent of ensuring necessary market correction at the earliest, the Commission decides to proceed to quantify the provisional monetary penalties on the basis of the data presented by Google. Accordingly, the Commission decides to take the revenue data of Google's business operations in India, as submitted by it vide submission dated 06.10.2022, as relevant turnover for computation of quantum of penalty. 415. Now, coming to determination of an appropriate amount of penalty to be imposed, the Commission has given a thoughtful consideration to the same including the averments and submissions made by Google. The Commission has taken a note of measures announced/ adopted by Google related to issues under investigation. The Commission also notes that it can impose penalty on average of th....
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....request of the parties seeking confidentiality over certain documents / data / information filed by them under Regulation 35 of the General Regulations, 2009 (as amended). Considering the grounds given by the parties for the grant of confidential treatment, the Commission grants confidentiality to such documents / data / information in terms of Regulation 35 of the General Regulations, 2009, subject to Section 57 of the Act, for a period of three years from the passing of this order. It is, however, made clear that nothing disclosed in the public version of this order shall be deemed to be confidential or deemed to have been granted confidentiality, as the same have been used and disclosed for purposes of the Act in terms of the provisions contained in Section 57 thereof. Accordingly, the Commission directs that two versions of the present order may be issued i.e., public version shall be served upon the parties and a confidential version shall be shared with Google through members of the confidentiality ring. The public version of the order shall be prepared keeping in mind the confidentiality requests and the provisions of Section 57 of the Act read with Regulation 35 of the CCI ....
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.... such customer, either through its own app or TPAP's app. Lastly, PSP Bank engages and on-boards the TPAPs to make the TPAP's UPI app available to the end-user customers : https://www.npci.org.in/what-we-do/upi/roles-responsibilities. 12. https://www.statista.com/statistics/1171872/india-value-of-digital-payments/ 13. https://static.pib.gov.in/WriteReadData/specificdocs/documents/2021/oct/doc2021101211.pdf 14. Ibid 15. Ibid 16. https://play.google.com/about/developer-distribution-agreement.html. The App developer is referred as "You" and Products is defined as: Software, content, digital materials, and other items and services as made available by Developers via the Play Console. 17. https://support.google.com/googleplay/android-developer/answer/9858738 18. The only occasions when the policy is not applicable are: (i) for the purchase or rental of physical goods (such as groceries, clothing, housewares, electronics); (ii) for the purchase of physical services (such as transportation services, cleaning services, airfare, gym memberships, food delivery, tickets for live events); (iii) for a remittance in respect of a credit card bill or....
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.... "...And we're also extending the time for developers in India to integrate with the Play billing system, to ensure they have enough time to implement the UPI for subscription payment option that will be made available on Google Play -- for all apps that are yet to launch, or that currently use an alternative payment system, we set a timeline of 31st March 2022..." 29. Sameer Samat (Vice President, Android and Google Play), "Boosting developer success on Google Play": https://blog.google/intl/en-in/products/platforms/boosting-developer-success-on-google/ . Few relevant extracts are as follows: "...Starting on 1st July, 2021 we are reducing the service fee Google Play receives to 15% for the first $1M (USD) of revenue every developer earns each year..." 30. Purnima Kochikar (VP, Play Partnerships), "Allowing developers to apply for more time to comply with Play Payments Policy": https://android- developers.googleblog.com/2021/07/apply-more-time-play-payments-policy.html. Few relevant extracts are as follows: "...After carefully considering feedback from both large and small developers, we are giving developers an option to request a 6-month extension, which will ....