Wednesday, October 26, 2022

Competition Commission of India doubles down on Android antitrust enforcement, further protects app developers in IAP context and prohibits Google Pay self-preferencing

Last week the Competition Commission of India (CCI) already rendered an almost 300-page Google antitrust ruling that I regarded as unusually comprehensive by international standards. Some of the remedies are beneficial to Android device makers, some others give end users certain rights (such as uninstalling preinstalled apps), and a couple of items are meant to enable app developers to distribute apps through sideloading (without the complications Google is currently causing) and alternative app stores, whose storefront apps Google must make available for download from its Google Play Store.

This week the CCI followed up with a second Android antitrust decision (199 pages) that puts app makers in an even stronger position vis-à-vis the monopolist. In this post I won't repeat what I already explained on the occasion of the previous decision, such as country-specific factors (for instance, Android devices account for about 97% of the market in India). Instead, I'll keep it much shorter and focus on what's really new.

There was a confidential complainant referred to as XYZ, Match Group (Tinder), and the Alliance of Digital India Foundation (ADIF). ADIF has multiple Indian app makers as members, and they are all listed on the homepage and pay membership dues. In other words, ADIF is a legitimate representative of actual app developers (like me, though I'm obviously not a member), not another Apple Association or Google front such as the so-called Application Developers Alliance. Let's be realistic: no app developer truly likes Apple's and Google's terms and practices. The only famous one ever to have spoken out in favor of one of them was Snap, supporting Apple with an obsequious public statement toward the end of the Epic Games trial, and shortly thereafter Snap's stock tanked "thanks" to Apple's ATT...

The CCI then decided to address all three complaints in one decision. The net result is that the complainants have won with only one exception: the preinstallation of the Google Pay-related APIs (application programming interfaces) on Android devices was not held to be anticompetitive.

Last week I didn't even mention a fine of roughly $150 million. It was actually the limit (10% of the annual average of three years of relevant revenues in India). This time around it's (another) 7%, not 10%. Anyway, the monetary amount looks small compared to EU Commission decisions or U.S. damages verdicts, but what really matters is in which ways Google will have to behave differently once the decision gets enforced. India is the largest Android market in terms of unit volume.

Here's my short version of the behavioral remedies:

  1. App developers get the choice of using third-party billing and payment processing services for in-app purchases (IAP) as well as for paid downloads. Google is prohibited from discriminating or taking any other measures against apps that make use of that option.

  2. Anti-anti-steering (like the injunction Epic won against Apple under California state law, but broader).

  3. Google shall not restricct end users' access to, and usage of, features and services offered by app developers.

  4. Google must be clear and transparent about data it collects on its platform and how it shares such data with (not only, but particularly) app developers.

  5. Google must not use transaction data from Google Play Billing when it competes with app developers (in Apple land, such competition between the platform maker and app developers is called Sherlocking). It must also be transparent about what data it possesses that may be relevant in this regard.

  6. "Google shall not impose any condition (including price related condition) on app developers, which is unfair, unreasonable, discriminatory or disproportionate to the services provided to the app developers." That is extremely important because whenever and wherever Apple and Google are required to allow alternative IAP billing, they then charge practically the same commission (reduced only by roughly the cost of a payment processor such as a credit card company). If Google tries to play that game in India, it's going to immediately trigger a FRAND (fair, reasonable, and non-discriminatory) discussion. This item is closely related to the second part of the first item that prohibits Google from taking any measures against apps that use their own billing systems.

  7. Google must be transparent about fees, payment policy and related rules when it charges app developers for services.

  8. Google must not self-preference Google Pay over other apps using India's UPI national instant payment system. With Apple's App Store terms, policies, and practices being particularly outrageous (see my previous post), Apple Pay has previously drawn regulatory scrutiny, such as in the EU, where a Statement of Objections came down a few months ago. In the Northern District of California, class action lawyers representing credit card issuers against Apple actually portrayed the situation on Android as far better for alternative payment services than on iOS. But that case is about the U.S., where Apple is the market leader, and in India, where Google has a monopoly, there are issues involving Google Pay that the CCI decision elaborates on.

    The issue appears to be that only Google Pay uses Android's "intent flow"--a means by which one app can request other apps to perform a certain service--while Google Pay's disadvantaged competitors must rely on what is called a "collect flow" and involves more steps as well as moving different apps to the foreground.

    Instant mobile payments are another field in which it appears that Amazon's input to the CCI criticized Google's terms and policies rather strongly and convincingly.

The above is a very good set of remedies: effective and foresightful. It's a safe assumption that the CCI has had the benefit of seeing what happened in other jurisdictions, and the FRAND requirement will enable it to address any bad-faith compliance by Google.

Just a couple more observations:

  • There are obviously some overlaps between this decision and last week's ruling concerning market definition and abusive conduct. But the Android app store part is more elaborate in the second decision. For example, the CCI explains that web apps are not an alternative to native apps that users install on their devices, and makes a very good point: if developers could save the 30% commission by offering web apps that offer (as Google suggests) a comparable user experience, it would have been done by many of them, which is evidently not the case, however.

  • Google complained about the CCI taking note of foreign decisions. The ruling clarifies that what may have been decided abroad is "not determinative but [as] persuasive value." Tellingly, Google itself cited foreign decision in its submission, and the CCI specifically names last year's Epic Games v. Apple judgment by Judge Yvonne Gonzalez Rogers of the United States District Court for the Northern District of California. I believe that one will be overturned soon, but in any event, the district judge based her market definition decision to some extent on her position that Epic was only a games company and to the extent it distributed non-game apps in its Epic Games Store, she deemed it to amount only to litigation tactics.

  • The decision mentions Microsoft as an example of companies who operate app stores on other platforms but have not announced an Android app store. At first sight, one might consider that reference erroneous, given that last week it became known--owing to a public redacted version of a Microsoft filing with the UK's Competition & Markets Authority--that Microsoft wants to operate a cross-platform mobile app store. However, I still think the CCI's reference to Microsoft as (for the time being) a non-entrant into the Android app distribution market is defensible. Microsoft explained to the CMA that it needs Activision Blizzard King's mobile games to attract enough users to its future cross-platform app store. And it's obvious that in addition to that, Microsoft would also need access to those platforms (on iOS there is no way to operate an alternative app store, and on Android it's only a practical option for device makers, but even they have rather limited success with it so far). If one interprets the CCI's mentioning of Microsoft narrowly, it's true that Microsoft has not announced a mobile app store to the market (a regulatory filing is a rather different context), and some prerequisite elements (such as clearance of the Activision Blizzard acquisition, but also legislation and regulatory intervention that will open up mobile app markets) have yet to be met.

In the aggregate of the two Indian Android antitrust decisions, the CCI has addressed what would easily require a handful of antitrust investigations in some other jurisdictions--and the CCI has definitely maintained its very high quality standard.