India Antitrust: Google Pay & Play Store Billing
India’s antitrust watchdog, the Competition Commission of India (CCI), has found that Google abused its dominance in the Android ecosystem, including by forcing app developers to use Google Play’s billing system for in-app purchases. This article explains the CCI’s rulings, the specific allegations against Google Pay and Play Store billing, and what the penalties and mandated changes mean for developers and users in India.
Background: Google’s Android Dominance in India
India is the world’s second-largest smartphone market, with over 700 million smartphone users, the vast majority running Android. Google’s Android is open-source, but the company requires device manufacturers to sign agreements to access the Google Play Store, Google’s suite of apps, and the ability to use the Android trademark. These agreements have been the focus of antitrust scrutiny worldwide, but the CCI’s actions in 2022 and 2023 were among the most consequential.
The CCI’s investigation began after complaints from Indian startup founders and industry bodies, who argued that Google’s policies stifled competition and innovation. The commission’s orders addressed two key areas: the Android mobile operating system itself and the Google Play Store’s billing policies.
The CCI’s October 2022 Android Ruling
On October 20, 2022, the CCI imposed a fine of ₹1,337.76 crore (about $162 million) on Google for abusing its dominant position in the Android mobile OS market. The CCI found that Google compelled device manufacturers to pre-install the entire Google Mobile Services (GMS) suite and placed them prominently, making it difficult for users to remove them. This, the CCI said, denied competitors like Amazon Fire OS and other app stores a fair chance to compete.
The order also prohibited Google from:
- Forcing device makers to pre-install Google’s apps.
- Linking the availability of the Play Store to the pre-installation of other Google apps.
- Offering revenue-sharing agreements that incentivize manufacturers to not use alternate versions of Android (forks).
- Restricting the development of forked Android versions.
Google was given three months to implement these changes. The company appealed to the Supreme Court, but the court largely upheld the CCI’s order in early 2023, with some modifications.
The Play Store Billing Policy and Google Pay
The second major issue was Google’s billing policy for in-app purchases. Google required all apps distributed through the Play Store that sold digital goods or services (like subscriptions, in-app currency, or premium content) to use Google Play’s billing system. This system charges a commission of 15% to 30% on each transaction. The CCI’s October 2022 order also addressed this, but a separate, more detailed order was issued on October 25, 2022, specifically on the billing policy.
The CCI found that Google’s mandatory use of Play Billing was a one-sided, arbitrary, and disproportionate condition. It noted that Google had a “dominant position� in the market for app stores for Android, and that the billing policy allowed it to charge a high commission without any competitive pressure. The CCI also took issue with Google’s “user choice billing� pilot, which allowed apps to offer their own billing alongside Google Play’s, but only if they paid a reduced fee—which the CCI argued still maintained the same anti-competitive structure.
Google Pay, the company’s UPI-based payments app in India, was not directly named in the CCI’s billing order. However, the order’s logic applies to any app that uses the Play Store, including Google’s own apps. In practice, Google Pay does not sell digital goods (it facilitates real-world payments), so it is not subject to the same billing commission. The confusion arises because Google Pay is often bundled with the Play Store on Android devices, and users might see it pre-installed, but its payment processing is separate from Play Billing.
What the CCI Ordered for Billing
In the October 25, 2022 order, the CCI directed Google to:
- Allow app developers to use third-party billing systems for in-app purchases, without any restrictions.
- Not impose any anti-competitive conditions on developers, such as forcing them to exclusively use Play Billing.
- Not discriminate against apps that use alternative billing systems.
- Refrain from using its market position to enter adjacent markets, like in-app payments.
The CCI also fined Google ₹936.44 crore (about $113 million) for this violation. The commission reasoned that the 15-30% commission was not justified by any real service, and that it inflated costs for consumers and developers.
Google’s Response and Compliance
Google initially resisted the CCI’s orders, filing appeals in the Supreme Court. The Court, in January 2023, refused to stay the CCI’s directives but allowed Google to continue its legal challenge. In the meantime, Google announced its “User Choice Billing� program for India, which allowed developers to offer their own billing system alongside Google Play’s, but still required a service fee of 11-26% (reduced from the standard 15-30%). The CCI and many developers criticized this as a workaround, not a true compliance.
In April 2023, the Supreme Court refused to hear Google’s appeal against the CCI’s order, effectively upholding the commission’s directives. Google then began implementing changes. As of late 2023, Google allowed developers in India to offer alternative billing systems, but it still charges a “service fee� for apps that use them. This fee is lower than the standard commission but is still a point of contention.
Impact on Developers and Users
The CCI’s rulings have significant practical implications:
- For developers: They can now choose to use a third-party payment gateway (like Razorpay, PayU, or Cashfree) for in-app purchases, potentially paying lower fees than Google’s 15-30% commission. This can lead to higher margins or lower prices for consumers.
- For users: They may see additional payment options in apps, sometimes including UPI, which is already ubiquitous in India. This could mean more choice and potentially lower prices if developers pass on savings.
- For Google: It loses its monopoly on in-app payments, which could reduce its revenue from the Play Store in India. However, it still charges a service fee, so it is not a complete loss.
It’s important to note that the CCI’s orders apply to India only. Google’s global billing policies remain unchanged, though similar regulatory pressures exist in other jurisdictions like the European Union and the United States.
Common Misconceptions
One common misconception is that Google Pay is part of the Play Store billing system. In reality, Google Pay is a separate app that uses the UPI (Unified Payments Interface) for person-to-person and merchant transactions. It does not process in-app purchases for digital goods. Another misconception is that the CCI ordered Google to make all apps free of any commission. That is not the case—Google can still charge a reasonable fee for distribution and other services, but it cannot force developers to use its billing.
Another point of confusion: the CCI’s orders do not affect the ability of apps like Netflix or Spotify to sell subscriptions through their own websites. They only apply to in-app purchases within apps downloaded from the Play Store. Many large apps already bypass Google’s billing by directing users to their websites for payments, which is why the CCI’s order is more relevant for smaller developers.
Frequently Asked Questions
Is Google Pay banned in India?
No, Google Pay is not banned. It is one of the most popular UPI apps in India, with over 200 million users. The CCI’s orders do not affect its operation, as it does not use Play Billing for its core payment services.
Can apps now use UPI for in-app purchases?
Yes, apps can now offer UPI as a payment method for in-app purchases, but they must integrate a third-party UPI gateway. Google Play’s billing system does not support UPI directly, so developers need to use a separate payment processor.
Does the CCI’s order apply to all apps?
Yes, the order applies to all apps distributed through the Google Play Store in India. However, apps that are not distributed through the Play Store (e.g., sideloaded apps) are not affected.
What is the “service fee� Google now charges?
Google’s service fee for apps using alternative billing is 11% for the first ₹1 million in annual revenue and 26% for revenue above that, for subscription apps. For other apps, it is 11% for the first ₹1 million and 30% above, but with a 4% reduction if the app uses the alternative billing system. These rates are still under legal scrutiny.
Will this reduce the price of apps?
Not necessarily. Developers may choose to keep prices the same and increase their profit margins. However, competition among payment gateways could lead to lower fees, which could be passed on to consumers in some cases.
What happens next?
Google has complied with the CCI’s orders, but it continues to challenge the fine and some conditions in the Supreme Court. The final outcome may take years, but the current status is that developers in India have the freedom to use alternative billing systems.
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