A decision from the Competition Commission of India (CCI) is forcing Google to revaluate its business model in the country as the company will have to allow developers to use third-party payment applications moving forward for in-app purchases.
In a 4-page summary released by the Commission yesterday, the parent company of Google, Alphabet (GOOG) was slapped with a $113 million fine due to the restrictions it imposed on the companies that use its Play Store app marketplace.
In regards to yesterday’s decision from the CCI, a spokesperson for Alphabet stated that the company is “reviewing the decision to evaluate the next steps”. Alphabet could appeal the regulator’s decision in court.
The Latest Fines Imposed by the CCI Are the Result of an Investigation that Started in 2022
The CCI’s investigation into Google practices started in 2020 at the request of a complainant whose identity was kept secret by the commission. The regulator found that the company had been imposing “discriminatory conditions” as they prevented other payment aggregators from being able to provide their services.
“The practices followed by Google results in leveraging its dominance in market for licensable mobile OS and app stores for Android OS, to protect its position in the downstream markets”, the CCI report reads.
This is the second fine that the California-based search engine giant receives from the Indian regulator in a matter of days as it was also asked to pay $161 million for the anti-competitive practices associated with its Android operating system.
This previous decision was deemed by the company a “major setback for Indian consumers and businesses” that may lead to an increase in the cost of Android-powered mobile devices and “serious security risks for Indians”.
The impact of the CCI’s decision on Google is not small for the firm as research indicates that more than 600 million devices are powered by the Android operating system. Meanwhile, according to data from Emizentech, India ranks second in number of hours spent by users on mobile apps with 669 billion hours compared to only 194 billion hours spent by US users.
Moreover, according to 42 Matters, there are approximately 30,500 app developers in India that use the Google Play Store to commercialize their software. A total of 161,781 apps made by Indian publishers are reportedly available within the Store.
Around 6% of these developers use in-app billing as a way to monetize their software while 4% of the apps available in the Store and created by Indian firms are paid. This is the audience that will be perhaps most benefitted from the actions taken by the CCI.
More and More Countries are Pressing for Changes in Google’s Practices
Multiple countries have been pressuring both Google’s parent company and Apple (AAPL) to ease the restrictions imposed by their marketplaces in terms of how payments are processed and other similar aspects of the service.
In 2017, 2018, and 2019, Google was slapped by the European Commission with multi-billion dollar fines amid its “abusive practices” associated with online shopping, the promotion of its search engine on Android-powered mobile devices, and online advertising.
In response to the growing uproar against the firm’s practices when it comes to how payments are handled within the Google Play Store, the company first slashed its fees from 30% to 15% for subscription payments. The measure came to effect on 1 January this year.
Meanwhile, Google further slashed the percentage fee to 12% in July this year for developers within the European Economic Area (EEA) – which covers more than 27 countries.
In addition, Alphabet eased its limitations on using third-party payment processors for in-app purchases in the region as a result of the pressures exerted by the European Commission.
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