Google withdraws appeal to India’s competition watchdog in user choice billing system case

In a major development that is set to impact India’s tech ecosystem, and perhaps act as a precedent globally, Google has opted to withdraw its appeal against an order from the Delhi High Court, instructing the Competition Commission of India (CCI) to investigate grievances raised by several Indian startups regarding Google’s user choice billing (UCB) system.

Google’s senior advocate, Sajan Poovayya, communicated the decision to withdraw the appeal, citing the timing of the original order during a period when the CCI faced challenges related to quorum. With the subsequent restoration of quorum, Google has chosen to step back from its legal appeal, leaving room for potential future considerations.

For a refersher, the tech titan had implemented the new user choice billing system after it was slammed with a hefty fine of ₹936 crore by the CCI. The financial penalty was levied last year due to abuse of its dominant position in the app store market. Google’s user choice billing system effective from April 26, had charged a service fee of 11% or 26% for third-party processors. In time, the Alliance of Digital India Foundation (ADIF), a notable think tank representing India’s digital startups, played a crucial role in escalating the matter to the legal arena. ADIF urged the CCI to make an investigation into Google’s UCB system, invoking the “doctrine of necessity.” In April, a single-judge bench of the Delhi High Court had in April asked the CCI to decide the plea.

And later on, the company contested a court order that directed the CCI to examine the plea against the UCB system. The CCI, for its part, aims to ensure compliance with its October 2022 directive, explicitly instructing Google not to impede app developers from utilizing third-party billing systems (the CCI order said that the “app developers have been allowed the option of an alternative billing system only in respect of in-app purchases, however, CCI’s order was applicable for paid apps also”). The investigation focuses on the intricacies of Google’s billing policy, particularly concerning in-app purchases.

Google’s decision to withdraw its appeal appears strategic, considering the mounting concerns raised by Indian startups regarding the UCB system. This billing system, introduced by Google in response to regulatory actions, has faced criticism from startups, deeming it burdensome and potentially anti-competitive. Google’s strategic retreat may indicate a recognition of the nuanced challenges posed by regulatory scrutiny and an acknowledgment of concerns within the app development community.