Madras HC Dismisses Pleas Filed By Indian Startups Against Google’s Billing Policy

In a major blow to Indian startups, the Madras High Court (HC) on Friday (August 4) reportedly dismissed 14 of the 16 petitions filed by homegrown players against tech major Google’s new user choice billing (UCB) system. 

As per Moneycontrol, pleas filed by startups such as Matrimony, Shaadi.com, Unacademy, Kuku FM, TrulyMadly, QuackQuack, Aha, Stage, and Kutumb, among others, were dismissed. On the other hand, the court is yet to take a call on similar petitions submitted by Disney+ Hotstar and edtech platform Testbook. 

The HC observed that the dismissed cases fell under the ambit of the Competition Commission of India (CCI), adding that the lawsuits filed by Indian startups were barred by Section 61 of the Competition Act. The HC noted that the remedies available under the Competition Act were ‘more comprehensive than that before a civil court’. 

The HC observed that while any order passed by it on the pleas filed by the startups would only be applicable to parties that have challenged the policy, any directive passed by the competition watchdog would cover all concerned businesses. 

The court said that the petitions filed by the startups were not maintainable and issued the order for dismissal of the pleas.

Google had argued before the HC that the lawsuits filed by the Indian startups were not maintainable and a civil court could not adjudicate in such cases as they involved allegations of antitrust violations.

However, the HC rejected Google’s contention that said that the cases ought to have been filed in the jurisdiction of the tech major’s headquarters in California. 

“Competition Act enacted by Indian legislature with the sole aim of preventing practices having adverse effect on competition will be of no use (if such a request is entertained). The preamble to Competition Act reads that it is an Act to ensure freedom of trade carried on by participants in (the) Indian market. Freedom of trade is a fundamental right available to Indian Citizens under Article 19 of the Constitution of India,” said the HC order seen by Moneycontrol.

Google Rejoices, Startups Seethe

The order came as a blow to Indian startups. In the past, the Madras HC barred Google from delisting homegrown players from its Play Store for not complying with the tech major’s contentious UCB policy till the matter was decided. 

Not just this, the HC had even directed the startups to pay a flat rate of 4% gross commissions to Google, against a slab of 11-26% in the new billing regime.

The matter dates to October last year when the CCI slapped a fine of INR 936 Cr on Google for abusing its dominance in the app marketplace segment. The competition watchdog directed the company to undertake sweeping reforms in its operations in India, and flagged its Google Billing and Payments System (GBPS), which levied commissions in the range of 15-30% on developers and companies.

Subsequently, Google unveiled a new commission structure, which offered a rebate of 4%, effectively setting the stage for 11-26% commission rates. Aggrieved by this, Indian startups approached the Delhi and Madras HCs and sought to keep the new payments system in abeyance till the CCI looked into the billing policy.

With the Madras HC’s decision, the ball is yet again in the competition watchdog’s court.

Note: We at Inc42 take our ethics very seriously. More information about it can be found here.