Delhi HC seeks startups' body's response to Google appeal against CCI probe into new payment policy

The Competition Commission of India (CCI) and the Alliance of Digital India Foundation (ADIF) were asked by the Delhi High Court on Wednesday to comment on Google's challenge to an order directing the regulator to investigate the tech giant's practise of allowing the use of third-party payment processors for paid app downloads and in-app purchases on a commission basis.

A bench of Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad gave notice in response to Google's appeal of the single judge's order directing CCI to take into account ADIF's argument against the new billing system by April 26 at the latest. ADIF is an association of individuals and an industry-representative body of creative start-ups in the nation.

When speaking on behalf of the appellant entity, senior advocate Sajan Poovayya stated that he was "not asking for an interim order" at this time.

"Issue notice," the bench said. On Tuesday, the court had turned down Google's request for an urgent hearing on the appeal that same day. According to Google, the Commission was due to take up the case in the afternoon in accordance with the single-judge bench's order when the appeal was brought before the bench for an urgent listing.

The ADIF had earlier this month complained to the single-judge that the anti-trust authority had not taken any action on its application objecting to Google's new payment policy since there was not a quorum present.

Google challenged the petition before the sole judge on a number of reasons, including that CCI couldn't decide the petitioner's application because there were only two members and the chairperson hadn't yet been chosen.

However, Justice Tushar Rao Gedela noted in his 38-page ruling on Monday that the Commission's adjudicatory powers would not be affected by any vacancies or defects in its constitution. According to Additional Solicitor General N Venkataraman, the Commission was established in accordance with the Competition Act's rules and was fully operational and performing its adjudicative duties.

"There is no impediment, legal or otherwise, in directing the CCI to take up the applications under section 42 (contravention of CCI orders) of the Act, as filed by the petitioner, for hearing and considering the same in accordance with law on or before 26.04.2023. Accordingly, the petition stands disposed of in above terms," the single-judge bench had said.

The ADIF had earlier submitted before the single-judge bench that under its "User Choice Billing" policy, which is slated to come into force from Wednesday (April 26), Google would be charging a service fee at 11 per cent or 26 per cent in case of third-party payment processors, which is anti-competitive and an attempt to bypass an order passed by the Commission.

It had stated that the US tech giant runs a mobile app store for Android smartphones dubbed "Play Store," which enjoys absolute control in that market, and that under the current system, third-party payment processors are not required to pay any commission.

The single-judge court was informed that the Commission urged Google to permit and not prohibit app developers from utilising any third-party billing services and not impose any discriminatory conditions in October of last year while levying a penalty of Rs 936 crore.

The ADIF had stated that its complaint was that the Commission had not acted on its request regarding the new policy because there was not a quorum to address the matter.

It had contended that the Commission must invoke the "doctrine of necessity" and look into the matter as a refusal to intervene will cause irreversible harm to the petitioners and other app developers, and lead to distortion in the market.

The implementation of the policy, in the meantime, must be kept in abeyance till the matter is looked into by the anti-trust regulator, the petitioner had prayed.