Indian Startups On The Edge As HC Reserves Order On Google’s Contentious Billing Policy

After hearing back-to-back arguments for two days, the Delhi High Court (HC) on Wednesday (April 19) reportedly reserved its order on a plea filed by Indian startups, under the banner of ADIF, seeking temporary suspension of Google’s contentious new user choice billing system. 

“Arguments heard. Order is reserved,” said Justice Tushar Rao Gedela, after hearing arguments filed by all the parties concerned.

Noting the April 26 deadline for implementation of the new payment system, ADIF’s counsel Abir Roy sought HC’s directions to the Competition Commission of India (CCI) for probing the tech major for alleged infringement of the watchdog’s October antitrust ruling. 

Citing CCI’s recent move, which allowed it to clear M&A deals without a quorum, Roy called for invoking the same ‘doctrine of necessity’ concerning a separate complaint filed by the ADIF before the commission, alleging flouting of antitrust directives by Google. 

Backing the claim, Match Group, which was represented by advocate Jayant Mehta, also called for invoking the same.

Roy also said that it was necessary for CCI to look into the matter despite a lack of quorum as any non-intervene would cause irreversible harm to app developers and lead to a distorted market.

In a terse reply, Additional Solicitor General N Venkataraman, representing CCI, contended that it would not be appropriate for the Commission to hear the antitrust plea at this point, noting that the process of appointment of members to CCI was underway. 

Responding to arguments calling for invoking the doctrine, Venkataraman said that the regulator was taking up M&A cases owing to Competition Act mandates that call for the resolution of such matters within 210 days of a company filing a notice. 

Representing Google, advocates Sajan Poovayya and Sandeep Sethi opposed the ADIF’s plea, saying that there was no material justification for the invocation of such a doctrine in the matter.

ADIF Mounts Legal Challenge

In its plea, ADIF had sought to keep the new billing policy in abeyance till CCI reached a consensus on its complaint that alleges flouting of antitrust norms by Google. While presenting its arguments on April 18, ADIF had sought interim relief prior to the implementation of the new norms, claiming that Google could use all the transaction data flowing into its system post-April 26 to push its apps.

The petition had also contended that there was a lack of quorum at the regulator and Google was taking advantage of this institutional lacunae.

At the core of the saga is the new billing system unveiled by Google post CCI’s October antitrust rulings, which found Google guilty of abuse of dominance in the Android devices market and regarding its Play Store policies. 

Subsequently, the commission penalised the tech major more than INR 2,200 Cr in two separate fines and asked it to undertake a sweeping overhaul of its Indian operations and policies.

Afterwards, Google instituted a slew of reforms and announced a new user choice billing system which allows app developers to embed third-party payment systems. While it charged developers 15-30% previously, the new billing regime set the commissions in the range of 11-26% for those opting for third-party payment processors.

However, ADIF, in its plea, claims that the new system is a ‘cloaked version’ of the previous billing policy and was an attempt by the tech major to bypass CCI’s antitrust directions. It also said that the new policy projected a ‘hoax of giving liberty to app developers to opt for third-party payment processors’, while the market remained vulnerable to Google’s abuse of its dominant position. 

This adds to a saga of regulatory bottlenecks that Google currently faces in one of its biggest markets globally. With the HC now having reserved an order on the matter, it remains to be seen whether judgement offers some reprieve to Google or makes matters worse for the tech company.