The apps game

Google should not misuse its dominant position

On Friday, the Google Play Store suspended the Paytm app and the Paytm First Games app for several hours. While the Paytm app was reinstated in the Play Store later the same day, the suspension highlights several different issues that could result in problems across multiple digital markets. Google has a near monopoly in India’s smartphone market. At the same time, the Google Pay service is a direct rival of Paytm (and other similar payment apps) in the so-called fintech space. Is Google using that android monopoly to shoulder out a rival, as alleged by Paytm? A second set of issues arises from the anomalous nature of Indian laws regulating online betting, and the differences between the regulatory regimes of India and those of the US in this respect.

Google’s operating system drives close to 99 per cent of India’s smartphones. Most android-users load apps from the Google Play Store by preference, although other app stores exist and it is possible to directly “side-load” apps, bypassing the stores entirely. Hence, a ban from the Play Store does impact even an app as popular as Paytm, which has over 50 million users. Given the direct rivalry, conspiracy theories are inevitable. There have been many analogous accusations that the search engine giant has abused its monopoly to promote its own services while downplaying services provided by rivals. It has been fined at least three times in the EU for anti-trust violations. Policymakers should review the Play Store situation in India. Google has its fingers in many digital pies and, given the new alliance with Jio Platforms, it will be entering more markets. Its dominance of the android space should not translate into muscling out rivals.

The stated reason for the suspensions was that Paytm was in repeated violation of Google’s policy of prohibiting apps for online betting. The Paytm app and the First Games App both connect to the Paytm First Games fantasy sports service. Users can put together fantasy teams consisting of real players picked from real teams and these games have real cash awards. Other apps that promote similar fantasy sports features have also been pulled from the Play Store in various jurisdictions, not just in India. This could happen all over again. Google is incorporated in the US, which has laws banning online casinos and online sports betting. Most of Europe and Australia, South Korea, etc. have far more liberal laws that allow online betting. India is an anomaly. Games of skill like fantasy sports and quizzes can be played online for cash rewards but betting on sports events is illegal. Google has tended to adopt a better-be-safe-than-sorry attitude in most jurisdictions and banned apps that would be deemed illegal in America. It has also banned apps that advertise external websites where such games can be played.

This leads to the awkward situation where Google Play impedes the playing of games which are legal in the given jurisdictions. These are big, popular, digital markets. Fantasy IPL has a huge following in India, while fantasy football is hugely popular across the globe. These are also unquestionably games of skill — it takes great skill to pick the cream of real life performers. It is a policy that Google should review in jurisdictions where such games are legal.