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The Madras High Court on Friday temporarily restrained Google from delisting apps of Indian startups from its Play Store.
This division bench’s order will apply if startups pay 4 per cent of gross revenue of downloads from the Store and share data for it with Google every month.
The court had on August 4 dismissed pleas filed by 14 companies , including matchmaking website Bharat Matrimony and edtech firm Unacademy, against Google’s in-app billing policy. The next hearing in this matter is likely on August 23.
The issue raised in the startups' pleas fell in the ambit of the Competition Commission of India (CCI), said the court then.
“Section 61 of the Competition Act expressly barred the jurisdiction of the Civil Court in respect of the matters which fall within the jurisdiction of CCI. Abuse of dominant position and imposition of terms of agreement by a dominant enterprise are all matters which fall within the jurisdiction of CCI as per the scheme of the Act. Therefore, I hold Section 61 Competition Act expressly barred the jurisdiction of the Civil Court from entertaining suits based on the cause of action relating to abuse of dominant position by an enterprise,” said the order by Justice S Sounthar.
The court had temporarily restrained Google from delisting the mobile applications of Matrimony.com Ltd, the parent company of Bharat Matrimony, from Play Store.
That order was passed on a plea filed by Matrimony.com challenging the new payment policy of Google. The matchmaking company sought to restrain Alphabet Inc and other subsidiaries of Google from removing/delisting its app from the Play Store for not accepting Google's new payment policy. The court had granted relief to Matrimony.com till June 1.
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“Accordingly, there shall be an order of interim injunction restraining the respondents /defendants from removing/delisting the mobile applications (mobile apps) owned and operated by the applicant in Google Play Store in India till 01.06.2023,” said the April interim order.
The CCI, in October last year, imposed a penalty of Rs 936 crore on Google and asked it not to restrict app developers from using any third-party billing services and to not impose any discriminatory conditions.
The startups alleged before the High Court that the Alternative Billing System/User Choice Billing System was introduced by Google only to circumvent or to sidestep the order passed by the CCI. They prayed before the court to declare charges levied under Google Play Billing System and Alternate Billing System/User Choice Billing System as illegal, void, and unenforceable.
The High Court, however, observed that if an order passed by CCI is violated, the Competition Act itself provides for effective civil and criminal remedies. “The present suits filed by 1st respondent/plaintiff(Matrimony.com) are barred by Section 61 of Competition Act,” the order said.
Matrimony.com had submitted before the court that it had entered into a Developer Distribution Agreement with Google Asia Pacific for listing its app in the Google Play Store. In 2020, Google made the use of the Google Play Billing System(GPBS) mandatory and exclusive for processing payments for downloading paid apps and In-App Purchases, they told the court.
Even after the CCI in October 2020 directed Google not to restrict the app developers from using any third-party billing/payment processing services, Google permitted the app developers to use ‘Alternative Billing System/User Choice Billing’ alongside and in addition to the GPBS, to circumvent CCI order, Matrimony.com told the court.
Matrimony.com argued that Google has been trying to take advantage of its monopoly in the Android platform and was compelling app developers to agree to their payment policy by charging service fees at the rate of 11 per cent and 26 per cent for payments made through the Alternate Billing System. It also told the court that if any company fails to agree to the new payment policy, their apps are being delisted from the Play Store.
Earlier in July, Disney moved the Madras High Court to challenge Google's in-app billing system. The company, which runs the Disney+ Hotstar streaming app in India, told the court that Google was threatening to remove the streaming app if it didn't comply with the new payments system. The court told Google not to remove the app from the store and directed it to receive a 4 per cent service fee from Disney.
Google had stated in May 2023 that it will start enforcing the Play billing policy in India. In February, Google said that it will allow app developers to offer an alternate billing system for in-app purchases within India from April 26, 2023.
The Alliance of Digital India Foundation (ADIF), which represents a group of digital startups, had filed a petition before the Delhi High Court in April to suspend Google's new in-app billing fee system, called the User Choice Billing (UCB) until the CCI investigates the company for alleged non-compliance with its directives. The ADIF had alleged that despite the regulator’s directive asking the tech giant to allow the use of third-party billing services for in-app payments, the UCB system charges a high service fee.
Google was to implement the UCB from April 26.
