The Google Play Store Billing Case, Competition Commission of India, 2022

Five days after the Android order, the Commission passed a second order on 25 October 2022 dealing with the terms on which applications are distributed through the Play Store. The complaint was that developers of paid applications and of applications with in-app purchases were required to use the store's own billing system, on which a commission was charged, and were forbidden from telling users that the same content could be bought more cheaply elsewhere. A penalty of about nine hundred and thirty-six crore rupees was imposed, together with directions altering the billing and steering conditions.

1. The Markets

The Commission proceeded on the layered approach adopted in the Android case, defining the market for licensable operating systems for smart mobile devices in India and the market for app stores for Android smart mobile operating systems in India, in both of which dominance was found, together with markets for the services affected, including applications facilitating payment through the unified payments interface and other digital payment services. The significance of the layering is the same as before: leveraging under Section 4(2)(e) requires a market in which the enterprise is dominant and a separate market into which the position is used to enter or which it is used to protect.

2. The Conduct Examined

1. Mandatory use of the proprietary billing system. A developer distributing a paid application, or selling digital content within an application, was required to use the store's billing system and could not integrate a third party payment processor. Because the store is the effective route to Android users in India, the requirement was examined as the imposition of a supplementary obligation under Section 4(2)(d) and as leveraging from the store into payment processing under Section 4(2)(e).
2. Discriminatory application. The obligation did not apply in the same way to the enterprise's own applications, which were examined under Section 4(2)(a)(i) as discriminatory conditions, and the commission charged on transactions was examined as an unfair condition.
3. Anti-steering restrictions. Developers were prohibited from communicating to users, within the application, that the same subscription or content could be purchased directly or on another platform at a lower price. The objection is that the restriction insulates the commission from competitive pressure: a developer that cannot tell the user about a cheaper route cannot compete on price outside the store.
4. Denial of market access. Developers of payment services other than the store's own were excluded from transactions taking place within applications distributed on the store, which was examined under Section 4(2)(c).

3. The Directions

• Developers should not be restricted from using third party billing or payment processing services, whether for the purchase of applications or for in-app purchases.
• Developers should not be prevented from communicating with their users to promote their applications or offerings, including as to price.
• The enterprise should not discriminate against other applications facilitating payment through the unified payments interface.
• Terms for the distribution of applications should be transparent, fair and non-discriminatory, and data collected through the billing system should not be used to gain an advantage in competing services.

4. The Appellate Position

The order was appealed, and the proceedings before the appellate tribunal and thereafter have continued, with parts of the directions and the quantum of penalty in issue. The current position should be checked before the case is cited for a final outcome. What is not in doubt is the analytical framework, which has been followed in later matters: layered market definition, the store as the gateway to users, and tying of the payment service to distribution examined under clauses (d) and (e) with anti-steering under clause (a)(i).

5. Why the Case Matters

1. App store markets. It establishes an app store for a particular operating system as a relevant market in Indian law, which is the premise of every subsequent complaint about distribution terms.
2. Payments. It is the leading Indian treatment of the tying of a payment service to a distribution platform.
3. Anti-steering. It introduced the concept into Indian practice, in parallel with developments in other jurisdictions and with the ex ante obligations proposed for digital gatekeepers.
4. Remedial technique. It shows the Commission preferring to restore the conditions of competition, by freeing developers to steer and to use other billing systems, rather than regulating the price of the service.

6. Related Topics and Provisions