Google Pay Case: Curious case of Self Preferencing

By Ria Mittal

The Competition Commission of India (CCI) has ordered an inquiry by the Director General (DG) into allegations that Google, through its influence over the Play Store and Android Operating System, favours its Google Pay (GPay) payment system over other apps.

The CCI took the prima facie view, that Google’s behaviour amounts to the imposition of unequal and discriminatory conditions, the denial of market access for apps competing with Google Pay, and the leverage of its market position, resulting in an abuse of its dominant position under Section 4(2) of the Competition Act, 2002.

The Commission had considered the following factors in delineating the relevant market, market for licensable smart mobile device operating systems in India-

  1. Operating system (OS) designed for mobile device are different in terms of use and characteristics from computer OS.
  2. From the Original Equipment Manufacturers (OEMs)’ perspective, only such operating systems are accessible to them which are licensed by the developers. Thus, the non-licensable operating systems such as iOS do not appear to be part of the same market since they are not available for license by third party OEMs.
  3. Relevant geographic market will be considered as the whole of India as conditions of competition are homogeneous.
  4. In 2017 Android accounted for 80% of India’s mobile OS market hence prima facie googles appear to be dominant in the relevant market

Similarly, the Commission had considered the following factors in delineating the relevant market as the market for app stores for android mobile operating systems.

  1. The Play Store, accounts for more than 90% of apps downloaded on Android devices.
  2. Google’s app store dominance is not constrained by Apple’s App Store, which is only available on iOS devices

The Commission noted that feature phones offer limited functionalities and as such, their OS cannot be a substitute with a smartphone OS like Android. Further the Commission noted that the relevant market has been defined from the perspective of OEMs and all non- licensable OS are not available with such OEMs as a substitute of Android OS. Due to considerable size and network effects of the Android ecosystem, OEMs do not have an effective choice but to offer the same to the consumers hence such non-licensable OS does not appear to be constraining the behavior of Google.  

The Commission further noted that all the available app store for android platform are the part of same market however on the available data the play store is the dominant source of downloading app. And due to the lack of technical knowledge of the user and the security concern most android user would not opt for sideloading/file sharing.

Based on the abovesaid, the Commission prima facie agreed with the above delineated relevant markets and the dominance of Google in the said two markets. In relation to the third relevant market for the for Apps facilitating payment through UPI, the Commission observed that, payment apps based on UPI appeared to be offering unique features as against other digital payment solutions. It allows multiple bank accounts in a single mobile app merging several banking features and seamless fund transfer, with both P2P and P2M transaction with both real time push and pull transaction around the clock 24 by 7 and 365 days a year.

CCI Further observed that while dismissing allegations of abuse of dominance by WhatsApp and Facebook for bundling its messaging App with the payment option (WhatsApp Pay) to penetrate into the UPI enabled Digital Payments App Market, vide its .order dated 18.08.2020 under Section 26(2)of the Act,  CCI formed a view that ‘market for UPI enabled Digital Payments Apps in India’ is a separate relevant market. It was further noted by the Commission that Payment System Indicators published by the Reserve Bank of India in its Annual Report for the year 2019-20, the growth rate of transactions being undertaken through UPI during the financial years 2017-18 to 2019-20 is substantially higher than growth rate of other digital payment options like IMPS, NEFT, credit & debit cards, etc.

In light of the above Commission formed prima facie view that market for apps facilitating payment through UPI is also a distinct relevant market.

Allegations of abuse of dominance under Section 4 and CCI’s prima facie opinion

Exclusivity Regarding Mode of Payment for Purchase of Apps and In-App Purchases (IAPS)

The Informant averred that by Google payment policy specifically provides that provides that developers charging for apps and downloads from Google Play must use Google Play’s payment system. The Payment Policy further provides that developers offering products within another category of app downloaded on Google Play must use Google Play In-app Billing as the method of payment. By making listing of an app on Play Store conditional on the app using Play Store’s payment system and Google Play In-App Billing for charging their users, the Informant alleged that Google is imposing a “take it or leave it” condition on all app providers. If apps do not comply with Google’s demand of using Play Store’s payment system and Google Play’s In-App billing, they will not be able to access more than 90% of the target users in India, which is not a feasible option for any app provider. The Informant further averred that this condition has been “imposed” can be further demonstrated by the fact that the Play Store charges a 30% commission from app providers for allowing them to use the Play Store’s payment system and Google Play In-App Billing.

If the app providers had an option, they could have preferred using alternative payment aggregators which charge a much lower commission and are established and trusted names in the online payment universe. The Informant alleges that by making listing on Play Store conditional on the apps using Play Store’s payment system and Google Play In-App Billing, Google has imposed an unfair condition on both sides of the platform, i.e., app providers as well as users. The condition imposed by Google is unfair to the app providers as it restricts their choice in terms of preferred payment partners and preferred modes of payment. The condition being imposed by Google is unfair to users as their choice regarding mode of payment is being restricted.

It has been further stated that the 30% commission is not being charged by Google for the purpose of listing these apps on Play Store, as the app providers separately pay a one-time fee of 25 USD for getting listed on the platform. Therefore, the Play Store is being adequately compensated by the app providers for acting as a distributor, without the need for paying any commission. Accordingly, the 30% additional commission is alleged to be one-sided, arbitrary, and onerous.

The Informant further alleged that Google through the Play Store is differentiating between Google Pay and other apps facilitating payment through UPI, such as, BHIM, Paytm, Phone Pe, etc. by only allowing its own payment offering i.e., Google Pay on its platform. As per the Information, at present, the accepted methods of payment on Play Store’s payment system in India are: credit or debit cards; online banking; mobile phone billing; Google Play balance and Google Play gift cards; and Google Pay. Thus, Play Store’s payment system does not allow any mobile wallet or other apps facilitating payment through UPI as an alternative to Google Pay which is alleged to restrict the choice for app providers as well as users.

Based on the above, the Commission noted that allegations of the Informant are primarily two-fold i.e.(a) mandatory use of Google Play’s payment system for purchasing the apps & IAPs in the Play Store and (b) excluding other mobile wallets/UPI apps as one of the effective payment options in the Google Play’s payment system.

The Commission was of prima facie view that mandatory use of Google Play store’s payment system for paid apps & In-App purchases (IAPs) restrict the choice available to the App developers to select a payment processing system of their choice especially considering when Google charges a commission of 30% (15% in certain cases) for all app purchases and IAPs.

90% of the App downloaded on Android OS is from Google Play store and its condition of payment for paid Apps and IAPS shows that Google controls a significant volume of payments processed in this market. It is this grip over the over Android ecosystem apparently resulted in ‘allegedly’ high commission fee of 30%.

The high fees would increase the cost of Google’s competitors and will be disadvantageous to its competitors in downstream market. The App developer if increases the cost to offset the increase price or cuts the features it will also affect the user experience. In the light of the above Commission was of prima facie view that imposition of such condition is unfair in terms of Section 4(2)(a) of the Act.

Regarding the exclusivity the Commission noted that support pages of Google Play Store show Google Pay was the only UPI based App allowed to be used as a valid payment method.

In view of the above, the Commission was  of the prima facie view that said conduct of Google amounts to imposition of unfair and discriminatory condition, denial of market access for competing Apps of Google Pay and leveraging of its dominant position in the markets for licensable Android OS for Smartphone manufacturers and the market for App stores for its Android OS to protect its market position in the market for App facilitating payment though UPIs on the part of Google, in terms of different provisions of Section 4(2)(e ) of the Act.

Pre-installation and prominence of Google Pay on Android Smartphones

The informant averred that Google encourages the OEM to preinstall the Google Pay App as a default payment App. And given that not many options are available to OEMs they are forced to do it. This in return encouraged the user to use Google Pay as their default payment App over the other Apps available.

The Commission observed that pre-installation of the Google Pay creates a sense of exclusivity. Google already has a significant presence in UPI based payment application market and it may affect the evolving and transitory market in its favor. Google using its market position to enter contractual obligation for preinstalling Google Pay might affect the level playing field. The Commission was of opinion that it will be appropriate and imperative to understand the nature of this contractual arrangement. Therefore, CCI was of the prima facie view that a detailed investigation is needed on the conduct of the google.

Search manipulation and Bias by Google in favour of Google Pay

The informant alleged that Google skews the search result on the play store to show Google Pay as the most relevant App even if it is not. It was further alleged that since Play store is “must have” have App this manipulated results and harms both the other payment app as well as the users.

The Commission observed  that though search result plays an important role in how the user discovers the App and this may have the potential of diverting the traffic in favor of the Google pay , however,  the Commission notes that the search result screenshots submitted by the informant and the OP showed  different results suggesting that the search ranking on Play store may  be dynamic in nature. And the allegation of the preferential placement cannot be based on only one/two screenshots. Submitted by the Informant.  In such a scenario, neither any prima facie opinion can be formed on the basis of few solitary instances nor investigation be ordered on this count.Thus, CCI dismissed this allegation.

Prominent placement of Google Pay on the Play Store

It was  alleged that Google has rigged its featured App lists in favour of Google Pay by including it in the nomination for “User Choice App for 2018”, ultimately declaring it the winner in this contest; “Editors’ Choice Apps”; and “Top-Free Apps”. It was also alleged that Google is promoting its payment system on the Google search as it comes as an option with  bill payments, recharge etc.

The Commission , however,  observed that though prominent placement of Google Pay may work as a potent instrument to direct the traffic in favour of the Google Pay thus interfering with the process of ‘competition on the merits’ yet  the Commission noted  that except for the bold assertions made by the Informant, there was  nothing on record to evidence such manipulation as alleged by the Informant and the Commission was  of the view that no investigation can be ordered on the basis of assertions made by the Informant which are neither corroborated or otherwise substantiated in any manner. Thus, CCI dismissed this allegation as well.


 This case provides the third instance in which CCI directed investigation into specific conducts by Google and is an off shoot of the investigation underway against Google for allegedly leveraging its dominant position in the markets for licensable Android OS for Smartphone manufacturers and the market for App stores for its Android OS to protect its market position in the market for App facilitating payment though UPIs, in terms of specific provisions of Section 4(2)(e) of the Act. Noticeably, CCI has directed investigation only in two, though major allegations , while dismissing four other allegations of favouritism, manipulations Google in it search results for Google Pay in the absence of any tangible evidence

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