Indian startup association calls out 'Google's strategy to disincentivize ... alternative payment solutions' by making alternatives even more expensive on the bottom line

Reports on Google complying with the Competition Commission of India's Android decision(s) are greatly exaggerated. Let's do a reality check.

I don't mean to bash "the media" because I appreciate how hard it is for tech reporters to keep track of competition enforcement processes with the limited amount of time they can devote to a single topic. Also, I honestly believe many of them do a much better job reporting on those cases in a way that a horizontal audience understands than I (with my focus on a vertical audience) could.

But Google is playing games with the media. It announces "compliance" knowing that the average reporter won't have the time to figure things out before the news cycle is over.

Another issue is not Google's fault, though: there are actually two CCI Google cases that involve issues of relevance to app developers (one ruling came down in September 2022, the other--which affords app developers further protection against abuse--the following month), but too many of the reports I see talk about developments in one of those cases without clarifying the connection with the other (and stating clearly which of the two cases a report relates to, though it can be inferred from the amount of the fine if that one is stated).

In one of those two cases, the Supreme Court of India has allowed enforcement to begin, though Google's appeal will have to be resolved soon. I took the position that some of Google's concerns over having to change its Android business model in India while appealing the decision are not unfounded. Last week Google announced the following changes that it suggests bring it into compliance with the CCI decision(s):

"OEMs will be able to license individual Google apps for pre-installation on their devices.

"Android users have always been able to customize their devices to suit their preferences. Indian users will now have the option to choose their default search engine via a choice screen that will soon start to appear when a user sets up a new Android smartphone or tablet in India.

"We’re updating the Android compatibility requirements to introduce changes for partners to build non-compatible or forked variants.

"User choice billing will be available to all apps and games starting next month. Through user choice billing, developers can offer users the option to choose an alternative billing system alongside Google Play’s billing system when purchasing in-app digital content.

"Android has always supported the installation of apps from a variety of sources, including via sideloading, which involves app downloads directly from a developer’s website. We recently made changes to the Android installation flow and auto-updating capability for sideloaded apps and app stores while ensuring users understand the potential security risks."

That set of changes relates to both CCI decisions. For example, only the first ruling addressed pre-installation by OEMs, and only the second order addressed in-app payments.

At this point it is actually unclear whether any of the steps taken by Google in response ot the CCI's competition enforcement will put an end to Google's monopoly abuse. For example, a streamlined "sideloading" flow that still scares users out of installing such apps may not change much about the extent to which users install apps directly instead of from the Google Play Store.

Another deficiency was immediately clear to me, which is why I wrote the following on Twitter (please forgive the autocomplete mistake in that tweet: I meant "charges", not "charge"):

Startups are not going to benefit at this point: "User Choice Billing" doesn't mean more $$ in app developers' pockets. Google just charts the same commission as always minus what the third-party payment processors will charge. It will take more than that to bring about change. https://t.co/bykRJcTw4Y

— Florian Mueller (@FOSSpatents) January 25, 2023

I am glad to see that the Alliance of Digital India Foundation (ADIF) has meanwhile criticized Google's announcement the same way and in fact even goes beyond: ADIF says "[this] is nothing but Google’s strategy to disincentivize app developers from using alternative payment solutions by ensuring the app developers pay more for not using GPBS [the Google Play Billing System]." ADIF rightly points to the fact that ADIF addressed this by prohibiting Google from imposing any non-FRAND condition on app developers.

I've already criticized the User Choice Billing scheme on several occasions (the following is not even exhaustive):

• September 9, 2022: Google is fragmenting Android with country-by-country rules for third-party billing systems in response to regulation and legislation

• July 20, 2022: Google's new European in-app payment rules insufficient to comply with DMA: overt discrimination against game makers, excessive app tax imposed on everyone

• July 1, 2022: Apple, Google testing limits of Korean law on in-app payment systems by charging 26% commission that renders use of alternative payment systems unprofitable

• May 10, 2022: Google's rapid response to Match Group's U.S. antitrust complaint talks about User Choice Billing--but what is truly needed is Developer Choice

Also, I welcomed the fact that the Dutch Autoriteit Consument & Markt (ACM; Authority for Consumers & Markets) is trying to thwart a similar scheme by Apple.

India is a key market because Google has a 97% market share there, meaning one doesn't even need a single-brand market definition to find Google to have a superdominant market position.

In other Google Android antitrust news, three dozen state AGs, Epic Games, Match Group, and class-action plaintiffs have presented some smoking guns for Google's spoliation of evidence to Judge James Donato of the United States District Court for the Northern District of California.

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Google's warning against unintended consequences of Indian antitrust enforcement is not entirely baseless, but third-party app stores and direct installs are needed--and not unprecedented remedies

Unfortunately, some (if not all) documents filed with India's National Competition Law Appellate Tribunal (NCLAT) are not publicly accessible, which is why a Reuters report on a new Google filing is the only source I have at this point on Google's efforts to halt the enforcement of an October 2022 decision by the Competition Commission of India (CCI) (shortly after which another Google antitrust decision by the CCI--with a focus on Android app distribution--came down).

Google told the NCLAT that "[t]remendous advancement in growth of an ecosystem of device manufacturers, app developers and users is at the verge of coming to a halt because of the remedial directions," and that "[n]o other jurisdiction has ever asked for such far-reaching changes based on similar conduct."

Given that the ruling in question--even though (again) we're just talking about the first one of two CCI Google decisions--comes with ten remedial orders, it wouldn't be fair to describe Google's claims as purely alarmist without taking a closer look at each item in terms of whether its enforcement should be stayed pending the appeal:

• The first six remedial orders would topple Android's entire revenue model (Google is so far not selling Android to device makers, but monetizing it through services) and broadly eliminate Google's ability to limit fragmentation (inconsistencies between different Android devices, which I can say from my experience as an app maker is an issue to take seriously without allowing Google to overuse it to the extent where it becomes a pretext). That set of remedies goes beyond the European Commission's Google Android ruling, which was affirmed by an EU court last year.

  Google's allegation that the CCI copied parts of the European Commission's decision is, at best, ironic. No company has stretched the envelope of "fair use" of copyrighted materials like Google (be it in the Google Books or the Android/Java API context). Google's search engine results pages copy parts of other websites, too. The CCI ruling has a lot of original elements (otherwise Google couldn't now claim that the scope of the remedies is unprecedented), including some great wordings. What I can't form a definitive opinion on for lack of access to the record is whether Google is right that the CCI adopted DG COMP's conclusions without having enough evidence in its own case file, but I doubt it, given the decision's references to testimony, particularly evidence provided by Indian companies. If the CCI concluded that its own evidence weighed in favor of adopting similar conclusions as the EC, then that's legit.

  As a Google Pixel purchaser, I have paid Google directly for using Android, but I've also purchased devices from companies like Samsung and (while Google was allowed to grant them an Android license) Huawei. I think it would be fair if each Android devices, regardless of who makes it, came with a fair, reasonable, and non-discriminatory royalty that would go to Google. Without taking a definitive position on the amount, I obviously don't mean a fee in the single digits (in U.S. dollars). By all means, Google should be able to profitably invest in the further development of Android, and I really like Google's innovative capacity and Android's product philosophy.

  Google mischaracterizes the ramifications of the remedial orders: Android development wouldn't have to grind to a halt because Google could react to the new regulatory framework. However, I don't think it's reasonable to require Google to reinvent and fundamentally change its Android business model (which is absolutely doable, but not totally disruption-free) while the underlying decision is under review by a court of law. When additionally considering the risks from potentially unfettered Android fragmentation through so-called "forks" in the Indian market, it's even more important that Google win a stay of the first six remedial orders--and at the end of the appeal, at least the anti-fragmentation part should potentially be tailored to a greater extent.

• The second group of remedial orders (#7 and #8) give Android users the right to deinstall any preinstalled apps, and to select a different default search engine (and to be able to do so easily and conveniently). Those basic user rights are neither overreaching nor unprecedented: in fact, it shouldn't even have taken the CCI order to get there. So Google should not win a stay or reversal with respect to those rights. It is possible that many Indian users will then use local competitor apps and search services to a greater extent, and that may in the long run require Google to look to other revenue sources (particularly license fees from device makers), but I don't see a doomsday scenario: it would be a slow and smooth transition.

• Finally, the third group of remedies addresses the rights of app developers (while also being beneficial to consumers, of course): third-party app stores and a level playing field for direct installs (somewhat pejoratively called "sideloading"). Those measures are absolutely needed. Chances are that Google will charge app developers anyway, and that's an issue that would have to be addressed separately, especially within the framework of the second CCI Google decision. What Google is really afraid of here is that India may become a test market that proves how well open app markets work--at a time when the European Union is working on the implementation of its Digital Markets Act (DMA) and the UK is about to start the legislative process on a similar measure that will give the Competition & Market Authority's (CMA) Digital Markets Unit (DMU) an additional tool to ensure competition in digital markets.

I support Google with respect to a potential stay of six of the ten remedial orders, but not on the remaining four items. And I believe Google should actually embrace any opportunity to make Android more open, which is the only way it can turn around Android's decline in the U.S. market (which obviously has some rather different characteristics from the Indian market).

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