Google faces investigation over App Store fees in India

India’s Competition Commission (CCI) has launched an investigation into Google’s in-app billing systems following allegations of excessive charges and discrimination. The CCI found merit in complaints from four entities, accusing Google of imposing discriminatory service fees, limiting market access, hindering technical development, and abusing its dominant position in the market.

The investigation comes after Google was fined and instructed to amend its Play Store policies in 2022, when its in-app fees ranged from 15% to 30%, with a minor reduction offered for using third-party billing systems, despite the absence of competitors at the time.

The CCI highlighted concerns over Google’s User Choice Billing (UCB) pilot, stating that the tech giant’s offering of an alternative billing option alongside its system appeared illusory, given the lack of effective competition. The commission argued that Google’s pricing strategy seemed unfair due to app developers’ heavy reliance on the Play Store, with fees having no reasonable economic relation to the services provided. Additionally, the complaints allege arbitrary distinctions made by Google between apps offering digital goods and those offering physical goods despite utilising the same developer resources and services.

Why does it matter?

India’s startup community, represented by the Alliance of Digital India Foundation (ADIF), spearheaded the call for the investigation, labelling Google’s actions as ‘brazen.’ The move reflects ongoing tensions between India and Google, exemplified by recent disputes over app removals allegedly violating Google’s billing protocols.

Notably, South Korea has already confronted similar issues with both Google and Apple, passing a law in 2021 requiring third-party payment options in app stores. Despite Google’s agreement to comply, ongoing disputes have persisted, resulting in fines for anticompetitive practices.