Explained: Why has Google stopped its billing policy in India? What does this mean for you?

Google has halted the enforcement of its Play Store billing system for in-app transactions in India.

This comes after the Competition Commission of India (CCI) slapped the company with a penalty of Rs 936.44 crore – its second major ruling against the company in recent days – over abusing its dominant position to force app developers to use its in-app payment system.

What happened?

The company said it was pausing enforcement of the requirement for developers while reviewing its legal options in the aftermath of the CCI’s decision.

The company wrote on its FAQ page, “Following the CCI’s recent ruling, we are pausing enforcement of the requirement for developers to use Google Play’s billing system for the purchase of digital goods and services for transactions by users in India while we review our legal options and ensure we can continue to invest in Android and Play.”

It added that the requirement to use Google Play’s billing system continues to apply for in-app digital content purchases for users outside of India.

Why did this happen?

The regulator in its decision said making access to the Play Store for app developers dependent on mandatory usage of GPBS (Google Play’s Billing System) for paid apps and in-app purchases constitutes an imposition of an unfair condition on app developers.

CCI also ordered Google not to restrict app developers from using any third-party billing/ payment processing services for purchasing apps.

The commission further said the mandatory imposition of this billing system “disturbs innovation incentives and the ability of both the payment processors as well as app developers to undertake technical development and innovate”.

This comes in the backdrop of Indian developers and start-ups planning to step-up lobbying efforts against the fees Google charges for selling apps and services through the Play Store, as per Mint.

Nearly 97 per cent of India’s 600 million smartphones run on Google’s Android mobile operating system, and start-ups have banded together in the past to say the payment policy hurt their businesses, as per Reuters.

As per Indian Express, Paytm’s Vijay Shekhar Sharma and BharatMatrimony’s Murugavel Janakiraman have in the past flagged such concerns to the IT ministry.

“The decision helps protect our revenues. We hope that Google implements this permanently as it’s not good for Indian digital start-ups - it amounts to digital tax for us," said Janakiraman, the CEO of BharatMatrimony Group, which run various apps that help people find life partners, told Reuters.

Globally, Google and Apple have faced criticism that the fees charged at their mobile app stores are needlessly high and cost developers collectively billions of dollars a year. Both have lowered fees in many circumstances and have said they are needed to fund a safe and secure mobile ecosystem.

Google had previously set a deadline of 31 October for developers in India to integrate apps with its Google Play billing system, which collects a commission that ranges from 15 per cent to 30 per cent for each sale.

This is the third time Google has had to push back the date of compliance in India after backlash from start-ups, developers and regulators in India – it previously deferred the start date to March 2022 and October 2022, as per Indian Express.

According to Yahoo, Google for its part has begun to allow alternative payment systems in India, South Korea, Australia and Japan on a pilot basis, charging lower commissions.

As per Hindustan Times, South Korea ordered Google to provide Play Store developers the option of alternative payment systems.

The country then passed a law barring app platforms from monopolising payment methods.

The move forced tech giants including Google to widen the options available to developers for accepting payments for app downloads, services, subscriptions, and in-app purchases.

What does this mean for consumers?

Not a whole lot.

But developers are another story.

Google’s Play Store constitutes the main distribution channel for app developers in the Android mobile ecosystem, which allows its owners to capitalise on the apps brought to market.

Indian app developers are not bound to use Google’s payment system to conduct all transactions with customers.

The CCI had in November 2020 ordered an inquiry into the issue of mandatory use of Google Play Store’s payment system for paid apps & in-app purchases, as per the report.

The commission at the time said its prima facie view was that such a policy is unfair as it ‘restricts the ability of app developers to select a payment processing system of their choice’.

Google is expected to challenge CCI’s ruling in court.

With inputs from agencies

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