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CASE ANALYSIS Xyz V Alphabet Inc
CASE ANALYSIS Xyz V Alphabet Inc
•Issue 1: Whether making the use of Google Play’s billing system (GPBS), exclusive and mandatory by
Google for App developers/owners for processing of payments for App and in-app purchases and charging
15-30% commission is violative of Section 4(2) of the Act?
•
•Issue 2: Whether exclusion of other UPI apps/mobile wallets as effective payment options on Play Store
is unfair and/or discriminatory as per Section 4(2) of the Act?
COURT OBSERVATION/DECISION
•In view of the foregoing analysis, the Commission delineates the following relevant market(s) in the present matter:
•a. Market for licensable OS for smart mobile devices in India
•b. Market for app stores for Android smart mobile OS in India
•c. Market for apps facilitating payment through UPI in India.
•The Commission holds Google to be dominant in in the first two relevant markets i.e., market for licensable OS for
smart mobile devices in India and market for app store for Android smart mobile OS in India. Further, Google is also
found to have abused its dominant position in contravention of the provisions of Section 4(2)(a)(i), Section 4(2)(a)(ii),
Section 4(2)(b)(ii), Section 4(2)(c) and Section 4(2)(e) of the Act, as already discussed in the earlier part of this order.
REMEDIES
•Accordingly, in terms of the provisions of Section 27 of the Act, the Commission hereby directs Google to cease and desist from indulging in anti-competitive
practices that have been found to be in contravention of the provisions of Section 4 of the Act, as detailed in this order. Some of the measures, in this regard, are
indicated below:
•Google shall allow, and not restrict app developers from using any third party billing/ payment processing services, either for in-app purchases or for purchasing apps.
Google shall also not discriminate or otherwise take any adverse measures against such apps using third party billing/ payment processing services, in any manner.
•Google shall not impose any Anti-steering Provisions on app developers and shall not restrict them from communicating with their users to promote their apps and
offerings, in any manner.
•Google shall not restrict end users, in any manner, to access and use within apps, the features and services offered by app developers.
•Google shall set out a clear and transparent policy on data that is collected on its platform, use of such data by the platform and also the potential and actual sharing of
such data with app developers or other entities, including related entities.
•The competitively relevant transaction/ consumer data of apps generated and acquired through GPBS, shall not be leveraged by Google to further its competitive
advantage. Google shall also provide access to the app developer of the data that has been generated through the concerned app, subject to adequate safeguards, as
highlighted in this order.
•Google shall not impose any condition (including price related condition) on app developers, which is unfair, unreasonable, discriminatory or disproportionate to the
services provided to the app developers.
•Google shall ensure complete transparency in communicating to app developers, services provided, and corresponding fee charged. Google shall also publish in an
unambiguous manner the payment policy and criteria for applicability of the fee(s).
•Google shall not discriminate against other apps facilitating payment through UPI in India vis-à-vis its own UPI app, in any manner.
•The anti-competitive clauses of different policies of Google, as identified in this order, shall not be enforced by Google, with immediate effect.
•Google, however, is allowed three months from the date of receipt of this order to implement necessary changes in its practices and/or modify the applicable
agreements/ policies and to submit a compliance report to the Commission in this regard.
ANALYSIS
•Locus Standi
The CCI ruled in favour of the Informant while recognising the essence of the Act i.e., ensuring economic stability and preserving competition in the market. The detailed account
of Locus Standi can be found in the previous edition.
•Relevant Market
The CCI took into consideration the core points that were deliberated upon while determining RM1 and RM2 in its order in Umar Javeed and Others v. Google LLC and Google
India Private Limited6 and thus, the Commission opined that both the RM1 and RM2 are appropriate and necessary markets for assessment of the impugned conduct. Concerning
RM3, Commission relied on its finding in Harshita Chawla v. WhatsApp and Others to ascertain that RM3 is a separate relevant market. The Commission also relied on the number
of payments made through UPI and other mediums to ascertain a substantial increase in UPI payment than other mediums. Thus, ruling that UPI's characteristics and features make
it distinct from other digital payment options.
•Dominant Position
The Commission rightly upheld the contentions of the Informant in relation to the determination of the dominant position of Google’s dominance in both RM1 and RM2. The
Commission relied on its findings in Umar Javeed and Others v. Google LLC and Google India Private Limited to substantiate its above mentioned findings. It further noted that
sideloading prima facie seems to be not secure and requires more technical knowledge and thus, users ignore the same.
•Abuse of Dominance
Exclusivity Regarding Mode of Payment for Purchase of Apps and In-App Purchases
Allegations are primarily two-fold:
a. Mandatory use of Google Play’s payment system for purchasing the apps & IAPs in Store
b. Excluding mobile wallets/UPI apps as one of the effective payment options in the Google Play’s payment sector.
Regarding (a), the Commission is of the prima facie view that mandatory use of the application store’s payment system for paid apps and IAPs restricts the choice available to the
app developers. Google has high market power due to its grip over the Android ecosystem and the high commission fee, which acts as a deterrent for competitors, results from the
same. If application developers pass on these charges to users, it may affect user experience, cost and choice. It is also to be seen whether Google collects data from its downstream
competitors to enhance its services, whereas its competitors are devoid of such data collection resulting in a competitive advantage to Google. Thus, prima facie, the imposition of
such condition is unfair under Section 4(2) (a) of the Act. The Commission also pointed to the EC’s similar concern of the mandatory use of the app store’s payment system, an
excessive service fee/commission, and data accumulation. Regarding (b) The Commission examined that GPay has been integrated with
the intent flow (automated transition from Play to UPI and back). In contrast, other UPI is integrated through the collect flow (manual
transition). Thus, prima facie it appears that using GPay will be more convenient, thus increasing users’ inclination and preference to user
GPay over other UPI applications. What is important to examine, is that whether this difference puts competitors in a disadvantageous
position and whether Google allows competitors to be integrated with the intent flow or not. Furthermore, one of the support pages of
Google Play also mentions that GPay is the only accepted UPI app to make payments. This, prima facie amounts to unfair and
discriminatory conduct, denial of market access and leveraging by Google, thus contravening various provisions of Section 4(2) of the Act.
•Pre-installation and Prominence of Google Pay on Android Smartphones
The Commission observed that GPay may create exclusivity and users may not download competitors app if one is already installed.
Google has a significant market share in the UPI applications market and smartphone OS market; thus, even though the pre-installation is
done on a contractual basis, it may disturb the level playing field. Therefore, prima facie, the nature of such a contract and its effect on
competition need detailed investigation.
• Prominent Placement Search Manipulation and Bias by Google in Favour of Google Pay.
The Commission noted that an app's prominent placement would attract maximum user attention and clicks and thus diversion of traffic
away from competitors. GPay being positioned favourably may lead to the above-said results. If the favourably positioned app is of
inferior quality, then the users may be potentially mislead resulting in an unfair imposition on users. Thus, if GPay is favourably positioned
on Google Play Store, it would mean that Google is leveraging its dominant position in RM2 to enter RM3. However, the screenshots
presented by the Informant and the OP showed different results. Thus, the Commission opined that search rankings are dynamic in nature,
and the evidences are scant to form a prima facie order of investigation.
•Search Advertisement Manipulation on the Play Store
Self-preferencing in search advertisements by a dominant app store can violate provisions of Section 4 in the Act, if found to be providing
undue advantage to a specific app relative to other competing apps. However, Commission was of the view that the Informant has not
placed any concrete evidence to substantiate the same, which could warrant an investigation into such practices.
•Exclusivity Requirement Imposed by Google Resulted in Unfair Terms Being Imposed on Users
In Abhijit Mishra v. Reserve Bank of India, the Delhi High Court stated that Google is a Third-Party App
Provider (TPAP) and is not a system-provider. The onus of storing the payment-related data only in India
is upon the system provider (NPCI) for UPI applications. Further, GPay was launched, complying with all
the NPCI requirements and have the permission of NPCI to share data with Google Group Co. and NPCI
has affirmed these facts in an affidavit to RBI. Further other sectoral compliances have to be examined by
the concerned sectoral regulator.
CONCLUSION
• The Commission deems it appropriate to deal with the 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 General Regulations, 2009 (as amended). For convenience, it is directed that the confidential
version of this order may be provided to such ring members/ individuals through one of the ring members, who may then
share the same with the other ring members nominated by Google