It is imperative for the start-up ecosystem, primarily in the UPI space, to highlight their payment concerns to prevent unfair competition in the market
In late October 2022, within the span of just one week, antitrust watchdog Competition Commission of India (CCI) imposed penalties on search engine tech giant Google on two separate counts under various provisions of the amended Competition Act 2022.
One was for charging excessive commission on in-app purchases and subscription services, and the other was for bundling of Android platform with Play Store and Google Mobile Services (GMS) suite.
In case of both the penalties, the CCI referred to ‘abuse of dominant position’ with respect to Google Play Store policies and in multiple markets of the Android ecosystem.
Media reports appearing late November 2022 indicated that the search engine giant is likely to challenge the CCI orders. Other reports revealed that another tech giant Apple Inc. may be able to avoid penalties as it does not have a licensable operating system (OS).
Google requires app developers selling their services/product to exclusively use Google Play Billing System (GPBS) for all customer billings. Similarly, if an app developer wants to reach out to Apple’s user base, the App Store is the only way and as such, all Apple policies are mandatorily applicable.
Divided Opinion
Pundits are divided on this issue as some are of the opinion that there is a basic difference between Apple’s and Google’s ecosystem, while others cited that, in practice, both are identical.
The legal fraternity is also seen to be divided on this issue. Some are of the opinion that it requires the CCI to emphasise on more ‘clarity and certainty’ with regard to remedies imposed on Google by CCI. Few others are also of the opinion that until and unless Apple justifies the ‘Apple Store’ usage and policies citing safety and privacy concerns, they are also going to face similar issue like Google with regard to restrictive or dominant markets.
Need For A Fair Regulatory Framework
In the current scenario, both app developers and end-users have a restricted choice and are being forced to use respective in-app stores’ policies for payment while allowing them payment offers on their respective in-app platforms.
This denies market access to mobile wallets that are currently in operation and also to apps that facilitate payments through the United Payments Interface (UPI).
Hence, it becomes imperative for the start-up ecosystem, primarily in the UPI space, to highlight their concern related to paying of high commission to App Stores because it is making businesses unviable, leading to unfair competition in the market.
It is also important from the consumer perspective, as they bear the ultimate cost of higher prices being charged to app developers, and for availing an app developer’s services. Creating awareness about this particular issue among the consumers is also crucial.
In recent period, several countries around the world have taken steps to address the size, impact and influence of global tech giants so that smaller players can sustain in the market. An example would be the UK’s Competition and Markets Authority (CMA) setting up the Digital Markets Unit (DMU) that will be responsible for designating certain digital firms as having ‘Strategic Market Status’, and thus focus on preventing harm and shaping markets to deliver greater competition and innovation.
Similarly, in the US, the government has launched a major lawsuit recently against another dominant global tech giant for using anti-competitive tactics to maintain and extend its monopoly in the search engine and digital advertising market.
There are many challenges ahead for the Indian internet ecosystem. There is a need to figure out whether or not to adopt the Gatekeeper provisions from the European Union’s (EU’s) Digital Market Act and Digital Services Act. If adopted, the prices charged by Gatekeepers have to be rationalised as well.
The recent CCI rulings against Google have initiated a discussion on the need for digital regulation. In this context, it needs to be looked into whether a regulatory body along the lines of TRAI and RBI can be established for regulating matters related to the digital space. Such a body will need legislative support as well.
The government has recently shared a draft Personal Data Protection Bill and its intent to replace the IT Act with ‘Digital India Act’. It remains to be seen how price regulation, promotion of fair competition, data protection and consumer privacy will be treated in these proposed regulations.
These issues need to be addressed by deliberating at appropriate forums with all concerned stakeholders including policy makers and regulators. The time is ripe to look into various provisions of regulations levied by multiple authorities that are directly or indirectly impacting the start-up ecosystem primarily operating in the UPI space.
(The author is Director, Alliance of Digital India Foundation (ADIF), a think tank for India’s digital startups – views expressed are personal)