User Choice Billing System Row: Madras HC Bars Google From Delisting Disney+Hotstar App

In a major reprieve for Disney+Hotstar, the Madras High Court (HC) on Tuesday (July 18) reportedly barred tech major Google from delisting the streaming giant from Play Store. 

The HC granted an interim injunction to Disney+Hotstar and directed the streaming platform to pay a temporary lower 4% commission to Google for using its proprietary in-app payments system, Reuters reported. 

While developers were liable for commissions in the range of 15-30% under the previous Google Billing and Payments System (GBPS), the new user choice billing (UCB) system offers a rebate of 4%, bringing the effective rate at around 11-26% under the new regime. 

Disney+Hotstar’s lawyers told the court that Google was threatening to remove the streaming app from its app marketplace citing non-compliance to the new UCB system, which has been fraught with legal challenges. 

Reacting to the development, a Google spokesperson said, “The order is interim in nature, and the temporary 4% figure is simply a fee that the developer will pay to Google each month while these legal proceedings play out.”

Earlier on Monday, the Indian streaming arm of global media conglomerate Walt Disney approached the Madras HC seeking a permanent injunction against the new payments policy, and sought protection from being delisted from Play Store. 

With this, Disney+Hotstar joined a growing list of Indian startups and companies that have challenged Google’s contentious UCBS. However, the entry of the streaming major marks a major showdown with Google as it is one of the few non-Indian parties to the case. 

The development comes at a time when Disney+Hotstar’s subscriber base has taken a hit following it losing the rights to stream the Indian Premier League (IPL). The company has reportedly seen an exodus of 5 Mn subscribers since Reliance-backed Viacom18 won the digital rights for IPL. As per the Wall Street Journal, the number of users in Disney+Hotstar’s kitty is expected to further shrink by another 8-10 Mn in Q3FY23.

Such has been the impact that last week it was reported that Disney was looking to sell its Indian arm or enter into a joint venture to keep its India business afloat. 

Google Caught In The Crossfire

At the heart of the matter is the landmark October 2022 ruling by the competition watchdog which imposed a penalty of INR 936 Cr on Google for abusing its dominance in the app marketplace space. The CCI directed the tech major to undertake changes to its India operations. 

Subsequently, Google announced the new payments system, UCB. Under the previous GBPS regime, app developers were charged anywhere between 15-30% for listing on Play Store and using Google’s in-house payments system. The UCB system offered a rebate  of 4%, leaving startups and developers still saddled with commissions to the tune of 11-26%. 

Right afterwards, a clutch of Indian startups moved multiple courts across the country, including the Madras HC and the Delhi HC, to restrain Google from implementing the new policy. 

While Bharat Matrimony was one of the first players to challenge the new policy in Madras HC, several other Indian startups such as Unacademy, Kuku FM, TrulyMadly and QuackQuack also moved the HC seeking an injunction on the new policy. The HC has already granted the injunction and directed the startups to pay a mere 4% commission to the tech major on the gross revenue generated via the Play Store.

Curiously, Disney+Hotstar’s move comes nearly a month after four more companies, including streaming platform Altt, audiotech startup Pratilipi, design platform Crafto and Tamil publisher Ananda Vikatan, also sought relief from the new mandates from Google.

(This story has been updated to include Google’s statement)