Delhi HC's ruling on Google's UCB is a ray of hope for startups: ADIF

The Delhi High Court has ordered the Competition Commission of India (CCI) to look into the complaints filed by the Alliance of Digital India Foundation (ADIF) against Google's User Choice Billing (UCB) system before April 26. The court had reserved its decision in the case on April 19.

This is with regard to the new in-app purchase billing system that goes into effect on April 26.

The ADIF represents several Indian startups including Paytm, Matrimony, MapmyIndia and TrulyMadly. The association had requested the court to direct the CCI to promptly investigate its grievances against Google's UCB system, or suspend the new policy until a review was conducted.

Delhi HC's Order A Ray of Hope For Startups: ADIF

Hailing Delhi High Court's ruling, Senior people at ADIF said Delhi High Court's Verdict provides a ray of hope to Indian startups, against Google’s unfair lagaan.

ADIF Officials said, "Based on ADIF's contempt application on the Google’s unfair commission, Hon’ble High Court has paved way for 
the CCI to adjudicate the matter on or before 26 April. The High Court observed that there is no impediment, legal or otherwise, in directing the CCI to take up the applications under Section 42 of the Act, as filed by ADIF, for hearing the application on or before 
April 26, 2023."

"ADIF had filed that UCB by Google is in gross violation of CCI directives and the appropriate authority must provide a stay on the matter, till the matter is adjudicated. ADIF have filed detailed submissions before the CCI on how Google is flouting the CCI order by way of the 
user choice billing," the officials added. 

ADIF spokesperson shared that, as a next step, ADIF will present more factual evidence to buttress our point and assist the CCI in making an effective adjudication of the contravention applications moved by the ADIF.

The Delhi High Court’s Ruling

A single-judge bench of Justice Tushar Rao Gedela pronounced the order and asked the CCI to decide on or before April 26 on the plea also seeking direction on the tech giant to keep the same in abeyance till the issue is adjudicated by CCI.

"There is no impediment, legal or otherwise, in directing the CCI to take up the applications under Section 42 of Competition Act as filed by the petitioner for hearing and considering the same in accordance with law on or before 26 April, 2023. It is made clear that the observations made herein are only to the extent of deciding the present lis before this court and shall not tantamount to any expression on the merits of the case and the same is therefore, without prejudice to the rights and contentions of all parties to be taken at the appropriate proceeding," Justice Gedela said.

What does the Plea say?

"...due to lack of quorum since 26th October 2022, it is practically non-functioning, and the Respondent No. 2 to 5 (Google) are taking advantage of the same are engaging in anti-competitive conducts which will cause irreversible harm to the members of the Petitioner and other app developers in the market and cause distortion in the market," the plea stated.

It stated that despite the user using third-party payment processors, Google will be charging "service fee" at a 4 per cent reduced rate from the developer for transaction which happen via non GPBS under the garb of new pricing policy.

"Presently, for such transactions, there is no requirement to pay any commission since GPBS is not used in such transaction. This commission of 26 per cent should not be charged by Google at all, as it is unfair, and arbitrary, when Google's payment services are not being used," the plea stated.

What Is Google User Choice Billing Programme?

Google has announced imposing new User Choice Billing program from April 26, 2023 under which the developers will have to pay a service fee to Google ranging from 6-26 percent for in-app purchases and subscriptions.

As per the new policy, if a user pays through the alternative billing system (also termed as User Choice billing system), the transaction will still be subjected to a service fee, but at a 4 percent rate reduction. 

According to the UCB system, the developers will have to pay a service fee to Google ranging from 6-26 percent for in-app purchases and subscriptions, depending on the type of app/service and the annual revenue it generates on Google Play, as compared to the regular 10-30 percent service fee.

ADIF vs Google

A group of Indian startups, under the aegis of ADIF, termed Google’s announcement to implement the User Choice Billing system in India as an "abusive dominance practice" by the company. ADIF alleges Google of wiping away 11-26% of revenue earned by Indian Startups, merely as commission without providing any specific service to these Startups.

ADIF approached the Competition Commission of India (CCI) in October last year requesting it to look into these “abusive dominance practices of Google” on an urgent basis.

An order was passed by CCI on October 25, 2022, directing Google to not impose any condition on app developers which is unfair, unreasonable or discriminatory to the services provided to them.

Since April 26 was approaching, ADIF had appealed the Delhi High Court to keep Google’s implementation of UCB at abeyance until the Competition CCI hears the complaint.