The Competition Commission of India (CCI) has announced that it will be launching an inquiry into the activities of Google (NASDAQ: GOOGL) regarding its User Choice Billing (UCB) system, a scheme that allows third-party payment providers for in-app purchases.
In April, several Indian tech firms filed a complaint with CCI over Google’s UCB system on allegations that it breached India’s antitrust rules. The grievances were spearheaded by Match Group (NASDAQ: MTCH), the parent company of dating apps Tinder and Hinge, and the Alliance of Digital India Foundation (ADIF), a body representing Indian startups, on the grounds that Google charged high service fees for in-app payments.
The 15-page document submitted to the CCI requested the regulator to order Google from charging any commission or service fee on its offering that allowed third-party payments. The CCI confirmed via a statement that the issues raised in the complaint are weighty enough to launch an investigation.
“Google’s policy change of charging a service fee even on transactions processed by third-party payment processors has detrimental consequences for users and app developers,” read the document. “The policy of UCB is unfair, and the same would lead to unjust enrichment to Google.”
Currently, app developers pay between 11% and 26% to Google as service fees plus an additional 3% to third-party payment firms. However, Google stated in a separate statement that the service charge is used to support the Android operating system and its App Store.
Google clarified that service charges provide additional funding for its free developer tools and analytics.
In its order, the CCI asked Google to provide further details for its in-app payment system before and after the launch of the UCB. The competition watchdog gives Google a four-week response window as all parties brace for a protracted legal tussle.
Before the launch of the UCB, all app payments were carried out via its proprietary payment system, which critics claimed stifled technical development. The CCI slammed a $113 million fine on Google prompting the company to pivot to the UCB system.
Increasing friction with Indian regulators
Apart from trouble with its payment options, Google has received warnings from regulators over marketing its Android system in India. To align itself with regulation, Google announced that it would allow users to pick their default search engines but remarks that the sweeping changes will be an arduous task.
“Implementation of these changes across the ecosystem will be a complex process and will require significant work at our end, and in many cases, significant efforts from partners, original equipment manufacturers (OEMs), and developers,” said Google.
The Big Tech firm sees India as a key market for its services, given its control of the smartphone market. Out of the 600 million smartphones in India, 97% run on Android compared to the figures from North America and Europe, where IOS devices control a sizable chunk of the market.
India is keen on improving its digital economy via blockchain technology, using the carrot-and-stick approach to get service providers to comply with its long-term objectives.
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