Madras HC Grants Interim Relief To Startups From Google Delisting

In a significant development, the  Madras High Court has issued a temporary restriction on Google, preventing the tech giant from delisting a group of Indian startups from its Play Store. The division bench of Chief Justice SV Gangapurwala and Justice PD Audikesavalu passed this interim relief on the condition that the startups involved must allocate 4% of their gross revenue generated from downloads through the Play Store to Google. This order comes in response to an appeal filed against the single-judge order of the high court that previously dismissed pleas filed by the startups in opposition to Google's user choice billing system.

What is User Choice Billing System?

The central point of contention revolves around Google's user choice billing system, which allows users to choose from various payment channels while incurring a service fee ranging from 11% to 26%. Startups that remain within Google's billing ecosystem are subject to a service fee spanning 15% to 30%. This innovative policy by Google sparked the legal battle with startups like Bharat Matrimony, Shaadi.com, Unacademy, Kuku FM, TrulyMadly, QuackQuack, Aha, Stage, and Kutumb, among others.

Interim Protection Extended to Startups

The Madras High Court has granted interim protection to the appellants, a group of nine startups, who appealed against the single judge's dismissal of their commercial suits regarding the Google Play Billing case. This protection will remain in place until the next hearing scheduled for August 23. The division bench comprising Chief Justice SV Gangapurwala and Justice PD Audikesavalu emphasized the importance of providing a legal shield to these startups during the ongoing legal proceedings.

Single-Judge Dismissal and Competition Commission Jurisdiction

Earlier, a single-judge bench of the Madras High  Court had dismissed the majority of pleas presented by Indian startups against Google's app billing policy. The judge, Justice S Sounthar, stated that the concerns of the startups fall under the purview of the Competition Commission of India (CCI) rather than the civil court. This decision was challenged through appeals, leading to the recent interim order.

Legal Arguments Around The Startups’ Appeal

Senior Counsel P Chidambaram, representing Matrimony.com, argued that the single judge's ruling lacked proper legal references to deny startups the right to seek relief in a civil court. Chidambaram pointed out that similar to banks, which can be sued despite RBI's jurisdiction, startups should also retain the ability to file suits in the civil court. Advocates further contended that while CCI can offer certain remedies, the jurisdiction of the civil court is not completely eliminated.

Google's Shifting Billing Policies

Initially, Google mandated all app developers to use its Google Play Billing System (GPBS) for all transactions, charging commissions of 15% to 30%. Google's revised billing approach introduced an "alternative billing" option, allowing developers to employ third-party billing systems while imposing a service fee ranging from 11% to 26%. Matrimony.com and other startups challenged this fee before the High Court, leading to the ongoing legal battle.

Future Proceedings

The Madras High Court is set to continue hearing arguments regarding the Google Play Billing case on August 23. Senior Advocates including P Chidambaram, Sriram Panchu, Satish Parasaran, Srinath Sridevan, and others, along with advocates from Tatva Legal and Sarvada Legal, are representing the appellants, emphasizing the startups' right to seek recourse within the civil court jurisdiction.

As the legal battle ensues, the court's eventual decision could potentially have broad implications for the relationship between tech giants and app developers in India's digital ecosystem.