CCI’s fines may not impact Google’s near-term revenue

On 20 October, the anticompetitive watchdog imposed a fine of ₹1,337.6 crore on Google, accusing it of abusing its dominant position in the market for Android devices through pre-installed apps and services. Five days later, CII imposed another penalty of ₹936 crore, stating that the company was involved in anticompetitive activities, forcing application developers to either use its own payment tools, or pay a hefty service usage fee to Google even if they paid using other payment methods on Play Store.

Last November, the company’s regulatory filing with the Registrar of Companies (RoC) pegged its annual revenue for FY21 at ₹6,386 crore. Of this, 73% was from providing cloud platform and information technology infrastructure. The Google Play Store is not a major contributor to Google India’s overall revenue.

Even Google Payments India, which handles all payment and billing related operations, reported an annual revenue of ₹14.8 crore in FY21—just 0.2% of Google India’s revenue.

Sijo Kuruvilla George, executive director of industry body Alliance of Digital India Foundation (ADIF), said Google’s India revenues are not likely to be affected as a result of CCI’s order since the company may look at alternative avenues to comply with the regulatory body’s recommended remedies.

“While most global precedent is of legislative moves, India’s order comes as a regulatory measure to control the market dominance of a technology company. As a result, Google will also likely look for ways to stall compliance, beginning with a stay order on the CCI remedies,” George said.

CCI recommended 20 ‘remedies’ to Google, including changing its policies that mandate preinstallation of its apps on Android devices, and enabling the use of third-party payment systems by app makers on the platform.

On Tuesday, CCI asked Google “not to restrict” developers from using third party billing and payment services in their apps. So far, developers willing to list their apps on the Google Play Store were required to mandatorily use Google’s payment instruments to process all in-app purchases.

The regulator also asked the company “not to discriminate” against apps using own ways to accept payment for app-linked purchases by users, adding that Google “shall not impose any condition, including any price related condition, on app developers, which is unfair, unreasonable, discriminatory or disproportionate to the services provided to app developers”.

Akshayy S. Nanda, partner and competition law specialist at law firm Saraf and Partners, said the CCI order leaves room for ambiguity since “there is no clear definition of what conduct could be deemed ‘unfair’ or ‘unreasonable’. As a result, Google is likely to challenge the order at the National Company Law Appellate Tribunal, before the suggested remedies are enforced.

CCI, on its part, has given Google 90 days to implement the changes to its policy for accepting payments on Play Store. A Google spokesperson said on Wednesday the company is “reviewing the (CCI) decision to evaluate its next steps”. The costs are low for developers on Play Store to enable “access to hundreds of millions of Indians”, he added.