No Interim Relief For Startups As Delhi HC Refuses Stay On Google’s New Billing System

In a temporary reprieve for Google, the Delhi High Court (HC) on Tuesday (April 18) refused to grant any immediate relief to the Alliance of Digital India Foundation (ADIF) which is seeking suspension of the tech giant’s new user choice billing system.

The court will next hear the plea on Wednesday (April 19) ahead of the April 26 deadline for the implementation of the tech major’s contentious payment system. The HC also directed the involved parties to file additional submissions before it by Tuesday evening. 

This comes nearly a week after Justice Pratibha Singh recused herself from hearing the plea without specifying any reason. 

Arguing before the court on April 18, the ADIF reiterated sought the HC’s directions for the Competition Commission of India (CCI) to adjudicate on the matter prior to April 26 or keep the implementation of the new billing system in abeyance till the competition watchdog reaches a consensus on the complaint that alleges flouting of antitrust norms by Google.

Under the new system, which comes into effect later this month, app developers will have to pay a commission of 11-26% as against 15%-30% earlier. 

Reacting to the submission, Justice Justice Tushar Rao Gedela observed that there is a conflict of commercial interest and sought clarification as to why the ADIF cannot challenge the new billing policy after its implementation.

Abir Roy, the ADIF counsel, argued that apart from paying commissions, the new billing system mandates submission of transaction data of users to Google, including of those who opt for third-party payment options. 

Citing the CCI’s antitrust ruling from October last year, Roy argued that Google could use all the data flowing into its system post April 26 to push its own apps. 

“As an app developer, all the transaction data I have to give to Google [sic]. The competition commission has found in the October order that since Google would have got all the data, it would have used it for their own apps. It’s a classic case of ‘operation successful, patient dead’ from the 26th if there is no intervention. So, what we’re asking today is the status quo,” The Economic Times quoted ADIF’s counsel as saying.

Roy also sought an urgent hearing before the competition watchdog in the matter, citing a recent move by the CCI which allows it to clear M&A deals without quorum. In its plea, the ADIF alleged that there is no quorum at the regulator and Google is taking advantage of the institutional lacunae.

Representing the CCI, additional solicitor general (ASG) N Venkataraman argued that the watchdog is taking up M&A cases as per the Competition Act, which calls for resolution of such matters within 210 days of firms filing a notice. 

Responding to the charge of lack of quorum, the ASG submitted that the Competition Act provides for no proceeding of the watchdog to be rendered invalid on account of any vacancy in or any effect in the constitution of the commission. Citing Section 22 (3) of the Competition Act, the ASG noted that the law has set a threshold of three members to answer questions that come up before any meeting of the CCI.

The proceedings also saw the court pull up the government on the matter on non-appointment of a full-time CCI chairperson. Justice Gadela called on the Centre to rush the nomination so that the HC is not left entertaining such matters owing to lack of quorum at the regulator. 

Meanwhile, Google contended that the competition watchdog is not empowered to issue an interim stay on the implementation of the user choice billing policy. 

Citing Section 42 of the Competition Act, Google’s counsel Sandeep Sethi contended that there is no provision for entertaining an interim plea once an enquiry has led to a final order, adding that the matter is still pending referring to the October antitrust ruling of Google. 

“So far as … present petition is concerned, it is maintainable before the Competition Commision. They have a right to raise their grievance before the Competition Commission under Section 42. The only thing now is whether the quorum is complete or not — the learned ASG is saying it is not complete,” Justice Gedela was quoted as saying. 

At the heart of the matter is the petition filed by the ADIF earlier this month which claims that Google’s new user choice billing norms are a ‘cloaked version’ of the previous regime and are an attempt by the tech major to circumvent the CCI’s antitrust directions. 

The plea also claims that the new system projects a ‘hoax of giving liberty to app developers to opt for third-party payment processors’, while the market remains vulnerable to abuse of dominant position by Google. 

This adds to the regulatory and legal quagmire that Google currently is in. The company has been bogged down by a slew of regulatory bottlenecks and penalties which run into excess of INR 2,220 Cr.