Google Vs Startups: Madras HC Reserves Judgement On Plea Against User Choice Billing Policy

The Madras High Court (HC) on Tuesday (June 27) reserved its judgement on a plea filed by Indian startups against Google’s contentious user choice billing system. 

Representing Google, senior counsel PS Raman said that the Competition Commission of India (CCI) has no grounds to decide the commission that Google can charge under the billing policy. He said even commercial courts lack the jurisdiction to take a call on such payments. 

Training guns at Indian startups, Raman also said that homegrown players earn ‘huge profits’ from distributing their apps on Play Store, yet complain about the tech major’s dominant market share. 

Elaborating on his point, he said some of the startups in question are themselves multi-billion dollar enterprises and cannot claim that their contracts with Google are unfair on the grounds that the tech giant is the stronger party. 

In retort, the Indian startups submitted that Google still has the upper hand when it comes to altering contracts by bringing in new policies even if the contact between them and the tech major is assumed to be one between equally strong parties. 

When one party has made a choice for both contracting parties, courts have time and again held that they will have the power to put limitations on it, said the counsel for Indian startups as per BQ Prime.

Raman also submitted before the HC that Indian startups have signed a contract with Google Asia Pacific and as such Google LLC cannot not be made a party to the matter. 

The agreement says that the applicable Google authority is decided on the basis of where the app would be distributed, and Google Asia Pacific is that authority here (in India), argued Raman. 

What Is The Issue?

At the centre of the row is a suit filed by Bharat Matrimony, Shaadi.com and other Indian startups in the HC challenging the tech major’s new billing policy. The startups urged the Court to pass an order restraining Google from delisting their apps for not adhering to the contentious billing system. 

The tech major, under the previous regime, charged app developers anywhere between 15-30% for listing on the app marketplace and using the tech major’s proprietary payments system. In October last year, the competition watchdog imposed an INR 936 Cr penalty on Google for abusing its dominance in the app marketplace model and directed it to undertake sweeping changes to its India operations. 

Following this, Google made changes to its user choice billing system. However, it still made the startups liable for paying commissions in the range of 11-26%, even if they were not using the tech major’s in-house billing system. 

Following this, Indian startups filed multiple cases in the Madras HC and the Delhi HC to restrain Google from implementing the new policy. Earlier, the Madras HC directed startups to pay a mere 4% commission to the tech major on the gross revenue generated via the Play Store in that month. It also warned Google against delisting the apps. 

Meanwhile, Google also moved the Supreme Court on Tuesday to challenge the National Company Law Appellate Tribunal’s (NCLAT) ruling upholding the INR 1,338 Cr penalty imposed on the tech giant by the CCI.