With Madras High Court dismissing their suits, as many as 14 domestic start-ups including Bharat Matrimony, Shaadi.com, Kutumb, FRND, Pratilipi and Vikatan among others face imminent delisting from Play Store if they do not comply with Google’s new updated UCB policy of April 26.

The latest Madras HC ruling is seen as a setback of sorts for domestic start-ups as the court has redirected the plea challenging Google Play billing policy to the Competition Commission of India (CCI). The matter falls entirely under the jurisdiction of CCI, noted Justice S Sounthar, who observed that the Competition Act was enacted as a special law to deal with the abuse of dominant position by enterprises. 

Justice Sounthar noted that special law will prevail over the general law and Section 61 of Competition Act 2002 expressly barred the jurisdiction of a civil court on matters that fell within CCI’s jurisdiction.

Raises concerns

The Court’s ruling raises concerns on legal action and remedy available against anti-competitive practices of global tech giants in India — it is now all the more challenging for domestic companies to protect their interests and compete on a level-playing field, said experts.

Accepting the updated UCB policy could mean the start-ups would have to fork out “service fee” (commissions) as high as 26 per cent to the tech giant on their apps (digital services and goods) downloaded by consumers. 

Hobson’s choice

With the dismissal of their pleas and consequent vacation of interim protection, domestic start-ups are now faced with a Hobson’s choice — either comply with Google’s UCB policy and pay exorbitant commissions to Google  or face delisting from Play Store, experts  said.

Among the aggrieved are some of India’s most promising and prominent start-ups, such as digital ed tech platform Unacademy and popular matrimonial platforms like Bharat Matrimony, Shaadi.com, and Jeevansathi.com. Other apps whose pleas were dismissed include Aha (video streaming service); Kutumb; FRND; TrulyMadly; ALTT: Web Series; Pratilipi and Vikatan (Tamil News & Magazine) .

The domestic startups have been further pushed to a corner as CCI is yet to decide the non-compliance proceedings initiated by start-ups against Google, as per the representatives of start-ups. On October 25  last year, CCI directed  Google to allow third-party payment billing service providers on Play Store.

The delay in disposal was attributed  to CCI remaining inquorate after the erstwhile CCI Chief Ashok Gupta demitted office on October 25. Now that new Chair, Raveet Kaur has assumed charge in May 2023, the  CCI has resumed  its full functioning and it is expected that CCI will intervene in the matter soon, added sources.

STORYSOFAR

CCI had on October 25 last year passed an order in Google Play billing policy case where Google was directed to allow third party billing system other than GPBS. 

Domestic start-ups lauded the CCI’s move, since Google charges a 30 percent commission for its billing system, whereas the prevailing market rate is around 2 percent to 5 percent.

Tech giant Google had post CCI’s order of October 25 last year expanded in January this year its User Choice Billing (UCB) policy to all developers in India and updated its UCB policy that went into effect from April 26. However the service fee charged was as high as 26% (just 4 percentage points drop).

Startups had moved CCI stating that Google is not complying with its October 25 order in true spirit. 

In between Google issued notices to Startups like shaadi.com and Bharat matrimony.com to either accept UCB or else they will be delisted. Madras HC had earlier issued injunction order stating that Google cannot delist them. But now all the pleas of 14 Startups (filed between April and June 2023) stand dismissed.

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