The National Company Law Appellate Tribunal (NCLAT) has upheld a penalty imposed on Google by the Competition Commission of India (CCI) for abusing its dominant position in the digital payments and app store markets, while ruling that the payment system is anti-competitive. However, the quantum of penalty has been reduced to ₹216.69 crore from ₹936.44 crore.
Google will now have to allow alternative payment systems for apps and in-app purchases. It also confirmed that Google cannot discriminate against other UPI-based payment systems for these transactions.
The Tribunal ruled that Google’s imposition of its proprietary Google Play Billing System (GPBS) on app developers violated Indian competition laws, effectively limiting market access for other payment service providers.
Ex-ante Regulations
The ruling signals a notable shift towards proactive regulation of Big Tech firms in India, as experts argue that current ex-post enforcement mechanisms are insufficient to prevent digital markets from “irreversibly tipping” in favour of dominant players.
“The report also clearly captures that the existing powers of CCI, which are based on an ex-post facto model and the need of the law. With regard to regulating the digital market on the mode of ex-ante has also been emphasized,” the NCLAT order observed.
It reflects the need for pre-emptive regulation (before the occurrence of anti-competitive behaviour) to manage the dynamics of digital markets.
Background
The case against Google originated from complaints by Match Group Inc (Tinder’s parent company), and the Alliance of Digital India Foundation (ADIF), which accused Google of abusing its dominant position through GPBS.
Google, it was alleged, mandated developers to use its billing system for in-app purchases, thereby restricting alternatives like UPI or third-party gateways. It also levied a 15-30 per cent fee on transactions, significantly higher than domestic payment providers, hurting smaller developers. Developers were also barred from informing users about alternative payment options outside Google’s ecosystem.
The CCI, after an investigation by the Director General, found Google guilty and imposed a penalty in October 2022.
Tribunal’s Ruling
The NCLAT’s ruling has upheld parts of the CCI’s findings while overturning others.
It confirmed Google’s anti-competitive practices, as a violation of Section 4(2)(a)(i) and Section 4(2)(e) of the Competition Act, which relate to imposing unfair conditions on developers and leveraging its dominant position to disadvantage competitors.
The Tribunal upheld several remedial measures imposed by the CCI. However, certain directives, particularly those related to Google’s data-sharing policies, were set aside.
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