SUMMARY
The tech major should stop the monopolistic behaviour and taxing Indian startups, says Matrimony CEO Janakiraman
Just a day before implementation, Matrimony has obtained an injunction against Google’s user choice billing policy
The Delhi HC has directed CCI to probe the complaints filed by Indian startups against user choice billing system by April 26
In a major blow to Google’s plans to roll out the user choice billing system, Murugavel Janakiraman-led Matrimony.com obtained an injunction against the tech major in the Madras High Court on Monday (April 24).
The injunction marks a big win for the startup, which is also backing another case against the new billing mandates in the Delhi High Court. As per the matrimony startup, it leveraged the provisions of the Payments and Settlement Act, 2007, to build its case against the tech major.
“Bank, etc., not to impose charges for using electronic modes of payment. Notwithstanding anything contained in this Act, no bank or system provider shall impose, whether directly or indirectly, any charge upon a person making or receiving payment by using the electronic modes of payment prescribed under section 269SU of the Income-tax Act, 1961 (43 of 1961),” says a reading of the Section 10A of the PSS Act.
In simple terms, Matrimony.com argued that under the provisions of the Act, intermediaries are barred from charging commissions on UPI payments. Building on this, the company argued before the HC that the new norms flouted RBI norms and sought temporary suspension of the contentious payment system.
Speaking with Inc42, Matrimony’s CEO and founder Murugavel Janakiraman termed the injunction a big win. He added that the fight will continue until Google stops its ‘monopoly behaviour’ of taxing Indian startups.
Janakiraman termed Google’s new billing system a threat to the Indian startup ecosystem and called for taming it.
“Google should not be left unchecked as it is a real threat to Indian digital startups. What has annoyed Indian startups is that we cannot pay 11-26% commissions to Google and still run a profitable business. Then, there is the issue of the Indian government losing revenue because the entire tranche of the money goes to Google. These are the real issues facing digital startups,” Janakiraman said.
Noting that CCI’s October 2022 antitrust guidelines directed the tech major to embed third-party payment processors and that too at reasonable charges, the Matrimony CEO said that Google violated these orders by introducing user choice billing system, which even charges developers for transaction outside the tech major’s payment system.
He also flagged concerns around mandatory reporting of transaction data by app developers to Google, even for those payments processed externally.
“Google has a list of companies who have to comply with these norms, which include startups offering digital services such as edtech, healthtech and other offerings. Tomorrow, they can add more companies under this ambit be it foodtech or ecommerce and who will stop them then? These charges are arbitrary and an abuse of monopoly,” Janakiraman added, opposing the new system.
This comes a couple of days after Shaadi and People Group founder and CEO Anupam Mittal likened Google to the digital East India Company, which charged Lagaan (agrarian tax) from developers.
Is Google’s New System Arbitrary?
It is pertinent to note that Janakiraman-led Matrimony is among a clutch of Indian startups, under the banner of ADIF, that have filed a petition against the US-based tech major’s user choice billing system in the Delhi High Court (HC). In a major reprieve on April 24, the Delhi HC sided with the startups and directed the competition watchdog to probe issues raised by these players by April 26.
The volley of legal cases comes close on the heels of the April 26 deadline — when the new payment mandates are expected to come into effect.
The new system imposes commissions in the range of 11-26% on developers for all apps listed on the Play Store. The new policy was implemented after CCI passed a couple of antitrust rulings against Google and penalised it INR 2,200+ Cr for abuse of its dominance in the Android devices markets and with regard to its Play Store policies.
CCI also directed Google to undertake changes to its India operations after which the tech major unveiled its new system, which offers a 4% rebate for payments processed outside its ambit, compared to 15-30% for all payments earlier.
Subsequently, the startups moved the Delhi HC and sought to keep the system in abeyance until CCI hears their plea. The petition termed the new system a cloaked version of the previous regime and said that the mandates projected a hoax of giving liberty to app developers to opt for third-party payment systems while maintaining Google’s stranglehold over the market.
With the Madras HC granting the injunction just a day ahead of the implementation, the order adds to the legal troubles of Google, which has already been dogged by a slew of regulatory issues. Complicating matters further appears to be CCI, which could now rule on the next course of action and could put a spanner in the works for the new billing system.
