Home Business Google’s CCI Orders: How It Affects App Innovation

Google’s CCI Orders: How It Affects App Innovation


How assesses its response to two recent penalties imposed by the Competition Commission of India (CCI), here’s a look at the app economy.

it is the bread and butter of mobile operating systems. According to Deloitte, India has the second highest number of mobile downloads with almost 27 billion downloads in 2021. The Indian smartphone user, who accounts for 11.6 percent of app downloads globally, spends more than 4 hours a day on . Income for It is expected to reach $2.3 billion in the country by 2026.

Google’s Android operating system (OS) controls 95 percent of this app ecosystem. The said that the alphabet belongs abused its “dominant position” in the ecosystem. It imposed a fine of Rs 936.44 crore on the tech giant and a cease and desist order on Play Store.

Before that, the antimonopoly regulator fined another Rs 1,338 crore for anti-competitive practices related to the Android OS.

In its response, Google said that “Indian (app) developers have benefited from the technology, security, consumer protection and unmatched choice and flexibility provided by Android and Google Play.”

As expected, the CCI’s order on the Play Store and Google Play Billing System (GPBS) has its supporters and those who believe it will stifle innovation in the Indian app ecosystem.

“The order ignores the long history of development that has made Google’s Android the dominant OS in Indian markets. Unlike its main competitors, the basic Android OS is available for free for smartphones in various price segments. This has benefited the Digital India ecosystem,” said Gauri Gokhale, Partner, Nishith Desai Associates.

Gokhale said that since the OS itself is free, Google claims it can take advantage of a business model where some apps can be made available for free while other monetizable apps are promoted to maintain a steady stream of investment. This, in turn, is necessary to maintain a continuous ecosystem of innovation for both Google and other app developers.

Gokhale said that “there seems to be no thorough investigation by CCI, like surveying end users and startups, the quality of products offered by competitors compared to the quality offered by Google. Moreover, the overall impact of Google’s app services must be considered, including how the mass availability of the Android OS and Play Store helped make education and logistics services more accessible during the pandemic years. Section 19 of the Competition Act requires a holistic approach. It seems that this is not enough in the order.”

The Alliance for Digital India Foundation (ADIF) agrees with the CCI’s orders. The organization, which is pushing for legislation to rein in app gatekeepers like Google and Apple, believes both firms have used their dominance to carve out more of the market and revenue share from app developers.

For example, a few months ago, Google only allowed developers and users to use its payment system for in-app purchases or any payments. Mandatory use was accompanied by a high commission, which was reduced from 30 percent to 15 percent. The company is also testing third-party payment options, but in moderation.

with asking Google to end its policy, app users can use third-party payment platforms like Paytm, PhonePay or UPI. Many of them result in commissions determined by market competition – they can drop to 3-4 percent, industry players say.

Barnik Chitran Maitra, managing partner of Arthur D. Little India & South Asia, called the CCI’s order a “welcome step”. “Contrary to what tech companies like Google or Apple might claim, this will drive more innovation and encourage players to create products. In an era where we are increasingly moving towards a decentralized ecosystem like Web3, it doesn’t make sense to have a market situation where one company owns 90 percent of search, the majority of premium devices, or even the dominant operating system on premium devices.” he says.

Maitra believes the orders are a sign that Indian regulators are serious about controlling the “monopolization of technology companies”. While he agrees that Android OS is indeed a low-cost operating system, much more affordable than its immediate competitors, he points out that Google’s revenue from search and ad services more than compensates for its investment in the app store.

“App developers will welcome increased competition between app providers’ services, diversification of their offerings, and thus more options for developers to choose from.”

App developers seem to share the same opinion. The co-founder of a US startup developing wearable health monitoring devices, who did not want to identify herself or the app, said: “India is one of the largest markets in the world for any mobile technology, and a prime target for most upcoming technology developers. While I get to st simple and guarantees you access to a huge share of this market because the new players in the field of applications and wearable devices have also felt the need for additional capabilities and flexibility.’

The startup leader welcomed the idea of ​​third-party payment options, as GPBS prevents developers from balancing payment options in a way that premium services are not too expensive for users. “For new startups like ours, our premium offerings become an important source of revenue. But we want to keep the prices for these services at an acceptable level. Even a 15 percent cut in GPBS raises consumer spending. for these services, often to an unpleasant range.”

With a similar case looming for Apple on the horizon, the CCI mandate, along with the reception it has received from app developers, is a clear indication that app store services need to quickly soften their payment and subscription policies, and diversify your offers.

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