Google is pausing the enforcement of its Google Play billing system for in-app purchases for app developers based in India. Indian app developers were supposed to comply with this requirement by October 31, 2022, which lapsed yesterday. But Google has now suspended this requirement, a decision that comes after two antitrust rulings against Google by the Competition Commission of India (CCI). Google’s support page notes, “Following the CCI’s recent ruling, we are pausing this enforcement of the requirement for developers to use Google Play’s billing system for the purchase of digital goods and services for transactions by users in India while we review our legal options and ensure we can continue to invest in Android and Play.”
Interestingly, the support page also notes that while the requirement for the Google Play Billing system has been suspended in India, it still “applies for in-app digital content purchases for users outside of India.” Meaning that if Indian app developers still wish to offer digital content for purchase to users outside the country, they will need to comply with the Play billing system.
Developers in India have long called this billing system requirement an unfair policy, adding that the commission system stifles innovation in a price-sensitive market such as India. The regulatory body has imposed two fines on Google so far. While one penalty is worth Rs 936.44 crore for abusing its dominant market position with respect to its Play Store policies, the second was worth Rs 1,338 crore for abusing its dominant position in multiple categories related to the Android ecosystem.
Google had extended the deadline for the requirements of the payment system in India in 2021 “due to unique circumstances with the payments landscape” in the country. The page goes on to note, “This deadline was further extended to October 31, 2022, to provide developers in India the required product support for recurring payments through convenient user payment systems, including UPI and wallets, and to also provide them more time in light of the changes to India’s recurring digital payments guidelines.”
What is the Google Play Billing system?
Google Play’s billing system is a compulsory requirement for developers who wish to offer in-app content for purchase. This is similar to how developers need to use Apple’s billing systems if they wish to sell goods or offer subscriptions to users. Both Google and Apple charge developers a commission ( 15 to 30 per cent) for the digital goods sold via apps.
According to Google’s support, the Play billing system is required for all purchases such as:
Digital items (such as virtual currencies, extra lives, additional playtime, add-on items, characters, or avatars);
Subscription services (such as fitness, game, dating, education, music, video, or other content subscription services);
App functionality or content (such as an ad-free version of an app or new features not available in the free version); and
Cloud software and services (such as data storage services, business productivity software, or financial management software).
Items that are not supported are rentals or sales of physical goods such as electronics, clothes, and groceries as well as physical services such as gym memberships, airline tickets, food delivery, etc. This means app developers engaged in selling these products do not need the Play Billing system.
The support page also makes it clear that its “billing system must not be used for peer-to-peer payments, content that facilitates online gambling, or any product category deemed unacceptable under Google’s Payments Center Content Policies.” Google made it clear in 2020 that apps relying on an “alternative in-app billing system will need to remove it in order to comply with the Payments policy.” Google claims all almost all developers have complied with this. Globally, June 1, 2022, was the deadline for all apps to comply with this requirement.
Google CCI fine on Play Store policies
In its order dated October 25, CCI noted that “Google’s Play Store policies require the App developers to exclusively and mandatorily use Google Play’s Billing System (GPBS)” and that developers are not free to provide a direct link to their own webpage and payment alternatives. It added that developers which do not comply get delisted from the Play Store and thus lose out on customers.
The order notes that “making access to the Play Store dependent on mandatory usage of GPBS for paid apps and in-app purchases is one-sided and arbitrary and devoid of any legitimate business interest.” The CCI order notes that “Google shall allow, and not restrict app developers from using any third-party billing/ payment processing services, either for in-app purchases or for purchasing apps. Google shall also not discriminate or otherwise take any adverse measures against such apps using third-party billing/ payment processing services, in any manner.” Google has said it will challenge the CCI order and is currently examining its legal options.