Indian Startups Take Legal Route Against Google’s New User Choice Billing System

Turning up the heat on Google, a coalition of Indian startups led by advocacy group Alliance of Digital India Foundation (ADIF) has reportedly urged the Delhi High Court (HC) to suspend the big tech giant’s new user choice billing system in the country.

In its plea, which was filed on April 10, the ADIF has called for keeping the ‘implementation of Google’s UCB (user choice billing) in abeyance’ until the Competition Commission of India (CCI) probes Google for not complying with antitrust directives.

In its 744-page filing, ADIF has argued that the competition watchdog is yet to commence hearings on its plea filed last month that sought an investigation into Google’s new billing system. 

The digital coalition had earlier approached the CCI alleging that the US-based tech major had devised a new system that still charged startups and developers hefty commissions despite directives to allow the use of third-party billing services for in-app payments.

ADIF has amped up the heat ahead of Google’s April 26 deadline for the implementation of the user choice billing system. Meanwhile, the HC is expected to hear the plea later this week. 

“At Google we take our commitment to comply with local laws and regulations seriously, including in India. Google has fully complied with the CCI’s order,” said a Google spokesperson.

Google Vs Indian Startups

The development comes days after the policy think-tank urged CCI to look into the ‘abusive dominance’ of Google, citing a high 11-26% service fee for in-app purchases. In its plea, ADIF noted that such high commissions would be a ‘death knell’ for the Indian startup ecosystem.

Google currently charges developers in the range of 15-30% as service fees for using Google’s proprietary payments system. However, under new directives, the developers will be liable for just a 4% rebate despite using none of the tech major’s resources.

At the centre of the drama are two separate penalties imposed by the competition watchdog on Google last year over its abuse of dominance in the Android devices market and its Play Store policies.

In its second directive, which penalised Google INR 936 Cr, the competition watchdog had slammed the tech major for forcing developers to use its in-app payments system, terming the system an abuse of market dominance. While Google denied all such claims, it embarked on a slew of changes to its Play Store policies, which introduced user choice billing for its customers

Under this, developers can deploy other payment options, circumventing Google’s stranglehold over the in-app payments system. However, developers still have to pay hefty commissions to deploy such systems if they list their apps on Google’s app marketplace.

Citing its rationale, Google claims that the new fee supports investments in the Google Play Store and the Android ecosystem, covering other costs and ensuring free distribution. On the other hand, startups claim that the new billing policy still takes away a major chunk of their revenues, rendering their business models unviable.

On similar lines, ADIF contends that Google is deploying the new norms in contravention of CCI’s directives and fines. This marks another standoff between Google and Indian startups. Previously, new-age tech startups such as MapMyIndia also flagged Google’s dominance and made no qualms about the big tech major’s alleged market dominance

With the startups now banding together to amp up pressure on the Alphabet company, it remains to be seen how the saga portends for Google. 

(This story has been updated with Google’s response)

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