Editorial

Controversy over Google and Paytm underlines the challenge policymakers face

| Updated on September 23, 2020 Published on September 23, 2020

Policymakers need to wake up to obvious conflicts of interest in the internet domain which need to be regulated with a measure of sophistication.

“Google is acting as the judge, jury and executioner,” says Paytm CEO Vijay Shekhar Sharma. The statement, made in the aftermath of the dramatic events of last week when Google decided to drop Paytm from its Play Store one fine morning, draws attention to an important fact that has been lost in all the din. And that is the obvious conflict of interest in Google being the platform for apps in India via its Play Store, and also being a player in the app ecosystem. Paytm said the reason Google cited for the Play Store eviction was alleged violation of its policy banning gambling apps. Google objected to Paytm’s cricket-themed scratch-card cash-back scheme for UPI transactions. Google, without naming Paytm, said it couldn’t allow apps that were “online casinos.” Paytm insists its apps involve no gambling and moreover that Google Pay has made similar scratch-and-win offers like Tez Shots, which let players score runs to win scratch-cards worth up to ₹3,300.

As a condition of being allowed back into the Play Store, Paytm had to pull out its UPI promotional scheme. The row has brought to the fore Google’s Play Store monopoly and its power to pull down apps that it feels violate its rules. Sharma is accusing Google of seeking to hinder Paytm’s ability to acquire new customers through its “dominance” of the country’s digital ecosystem. This allegation acquires a serious edge when seen in the context of Paytm being a competitor to Google’s own payments app, Google Pay. About 95 per cent of India’s mobile phones run on Google’s Android operating system and that means most of the apps are bought from the Play Store. Google has a hammerlock on the Android ecosystem in India and this monopoly means companies like Paytm have to rely on Google playing fair with its rivals. And it’s not only the payments market which is facing competition from Google. The tech heavyweight’s apps also compete in other areas like cloud storage, maps and email.

Google, which was found guilty of abuse of dominant position and unfair trade practices by the European Commission, is already under investigation by the Competition Commission of India after an unidentified party complained the company was “unfairly” promoting Google Pay in India. Google’s presence in India’s digital ecosystem is only set to increase with the internet giant planning to invest $10 billion in the country over the next five to seven years. All of this places a heavy responsibility on Indian regulatory authorities to implement tough oversight measures to ensure Google and others like Facebook, Amazon and Apple don’t steam-roll the competition in India. Policymakers need to wake up to obvious conflicts of interest in the internet domain which need to be regulated with a measure of sophistication. Regulators need to stay ahead of the curve, as the country pivots decisively towards a digital economy.

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Published on September 23, 2020
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