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Google's Clash with Indian Startups Sparks Legal Showdown

NCLAT Enters Fray: Google vs. Indian Startups Battle over Play Store Fees

11 May 2024

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Neelesh Bachani

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1. Google's removal of apps like Bharat Matrimony from the Play Store due to disagreements over in-app service fees sparked a legal dispute, with affected developers taking their grievances to the CCI and subsequently to the NCLAT.

 

2. Startups such as Kuku FM and Shaadi.com, along with industry bodies like the IBDF, have appealed against the CCI's ruling on Google's billing policies, particularly challenging the absence of a user choice billing system and Google's authority to delist non-compliant apps.

 

3. The introduction of Google's User Choice Billing system in 2023, which imposes service fees on downloads and in-app purchases, has led to heated debates regarding fair terms for developers and Google's dominance in the digital ecosystem. The outcome of the NCLAT's hearings holds significant implications for the future of app distribution and monetization in India

In March of this year, Google made waves by removing several apps from its Play Store, including Bharat Matrimony, citing disagreements over in-app service fees. The developers affected by this move opted to take their grievances to the Competition Commission of India (CCI), rather than acquiescing to Google's demands. The National Company Law Appellate Tribunal (NCLAT) has entered the fray, summoning both Google and the CCI to address challenges regarding the Play Store's billing policies. Notably, startups like Kuku FM and Shaadi.com have lodged appeals with the NCLAT, contesting the CCI's ruling against a user choice billing system and Google's authority to delist non-compliant apps. The Indian Broadcasting & Digital Foundation has joined the chorus of dissent, filing an appeal against Google's policies.

 

At the heart of the matter lies Google's introduction of the UCB (User Choice Billing) system in 2023, which imposed service fees ranging from 11 to 26 percent on downloads of paid apps and in-app purchases. This system also affords developers the option to utilize third-party billing systems, rather than exclusively relying on Google's infrastructure. However, companies like Mebigo Labs Pvt Ltd, behind Shaadi.com, and KuKu FM, along with industry bodies like the Indian Broadcasting and Digital Foundation (IBDF), have sought interim protection from Google's service fees until the CCI concludes its investigation into the matter. Their appeals for immediate relief were met with denial, with the NCLAT opting not to intervene at this juncture.

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The startups challenging the CCI's order argue that it disregards pertinent facts and evidence, suggesting that the UCB system is merely a rebranded iteration of Google's existing billing framework. Zeeshan Farooqui, a Partner at King Stubb & Kasiva, emphasized the pivotal role of the NCLAT in scrutinizing the merits of such challenges. With the potential to either validate or annul the CCI directive, these upcoming appeal hearings hold considerable significance, especially amid ongoing discussions regarding service fee arrangements between Google and emerging startups. The outcome of these deliberations could have far-reaching implications for business operations within the digital ecosystem.

 

In response to the mounting pressure, Google contends that its policies are designed to foster a fair and sustainable app marketplace, where developers can thrive while ensuring user security and convenience. However, the standoff underscores the broader tensions between tech giants and smaller players, as the latter seek greater autonomy and fairer terms within the digital economy. As the legal battle intensifies, stakeholders eagerly await the NCLAT's verdict, which could shape the future landscape of app distribution and monetization in India and beyond.

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