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CCI fines Google with Rs 936 cr for unfair trade practices, 2nd in a week

Alphabet Inc’s Google has been slapped with a penalty of $113 million (Rs 936.44 crore) by the Competition Commission of India on Tuesday.

SNS | New Delhi |

Alphabet Inc’s Google has been slapped with a penalty of $113 million (Rs 936.44 crore) by the Competition Commission of India (CCI) on Tuesday.

CCI slapped this penalty for abusing its dominant position with respect to Play Store policies and directed the company to cease and desist from unfair business practices.

This is the second time within a week when the market watchdog imposed a penalty on Google for abusing its dominant position in multiple markets in the Android mobile device ecosystem. Earlier this week Google was fined for Rs 1,337.76 crore.

In its fresh ruling, the regulator found Google to be dominant in the markets for licensable OS for smart mobile devices and market for app stores for Android smart mobile OS, in India.

“Selling of in-app digital goods constitutes an important means for app developers to monetize their creations/innovations. However, for in-app digital goods to be distributed to purchasing users, developers must configure their apps so that all purchases of the digital goods go through Google’s payment system, which processes the transactions,” it said.

Google’s Play Store policies require the app developers to exclusively and mandatorily use Google Play’s Billing System (GPBS) not only for receiving payments for Apps (and other digital products like audio, video, and games) distributed/sold through the Google Play Store but also for certain in-app purchases.

If the app developers do not comply with Google’s policy of using GPBS, they are not permitted to list their apps on the Play Store and thus, would lose out on the vast pool of potential customers in the form of Android users.

“Making access to the Play Store dependent on mandatory usage of GPBS for paid apps and in-app purchases is one-sided and arbitrary and devoid of any legitimate business interest. The app developers are left bereft of the inherent choice to use payment processors of their liking from the open market,” said the CCI.

Google India was yet to react to the fresh CCI ruling. India is Google’s largest market by users.

The CCI also directed Google to cease and desist from indulging in anti-competitive practices.

“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,” said the regulator.

In relation to the computation of penalty, the Commission noted that there were glaring inconsistencies and wide disclaimers in presenting various revenue data points by Google.

Accordingly, the Commission imposed a penalty of 7 per cent of its average relevant turnover amounting to Rs 936.44 crore upon Google.

The tech giant has been given a time of 30 days to provide the requisite financial details and supporting documents.

After many consumers complained about Google’s unfair business practices, CCI had ordered a detailed investigation in April 2019  into the matter.

After two years of investigation, CCI accused Google of adopting anti-competitive, unfair, and restrictive trade practices in the mobile operating system and related markets.

Google was found violating the two agreements i.e. The Mobile Application Distribution Agreement (MADA) and Anti Fragmentation Agreement (AFA) in the investigation.

Google has been facing such probes worldwide from the US, European Union, Germany, and Japan.

(With Inputs from Agencies)