IDMIF-Supported OTT Platforms wage legal war with CCI against Google Play Store
The Indian Digital Media Industry Foundation (IDMIF), a representative body for several notable streaming platforms in India, has lodged a complaint with the Competition Commission of India (CCI) against Google’s app store billing policy.
ℹ️ The IDMIF represents several prominent OTT platforms in India, including Disney+ Hotstar, Zee5, Voot, SonyLIV, Manorama Max, SunNXT, and Discovery+.
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Disney+ Hotstar Initiates Legal War Against Google Play Store
This action was initiated soon after Novi Digital Entertainment, the entity behind the Disney+ Hotstar app, approached the Madras High Court to halt Google from expelling their app from the Google Play Store.
Reportedly, it marks the first confrontation of Google’s policies by a non-Indian streaming platform.
The IDMIF has expressed that Google’s commission fee is unreasonable and damaging. They further stated that this policy could affect the business of smaller OTT platforms and channels, particularly those involved in the content curation business.
Background: Google’s New Rule for Play Store Developer
In September 2020, Google announced it would enforce rules requiring app developers who distribute Android software on the Google Play Store to use its in-app payment system starting the following year.
This announcement meant that developers had a deadline of September 30, 2021, to start using Google’s billing system, which charges a 30% fee on payments, rather than independent payment systems. And, importantly, this applied to subscription-based digital businesses.
This policy change aligned Google Play’s payment rules with Apple’s App Store, which developers and regulators have scrutinised for several issues, including its 30% commission. In contrast, using a payment gateway vendor would have resulted in 2-3% transaction fees – much lower than Google’s 30% commissions.
This decision was met with significant backlash from developers worldwide, including the Indian community. In response to the strong criticism, Google extended the deadline to March 2022, which was extended to October 31st, 2022.
CCI Imposes Hefty Fine on Google
Upon investigation, the Competition Commission of India (CCI) issued two orders in October 2022, both targeting Google. These orders resulted in substantial fines for Google and necessitated significant policy changes.
- The Competition Commission of India (CCI) levied a Rs. 936.44 crore fine on Google for abusing its dominant position with its Play Store policies, i.e. 7% of its overall Indian revenue.
- One fundamental change the CCI required was for Google to allow app developers to use third-party billing systems.
Details of the CCI ruling can be found here: https://www.cci.gov.in/antitrust/press-release/details/261/0
It should be noted that, in 2019, the CCI ordered a comprehensive investigation following consumer complaints using Android-based smartphones. The case concerning Google Play Store policies was initiated in 2020 based on information provided by an anonymous party.
ℹ️ The Commission is tasked with eradicating practices that negatively impact competition, fostering and maintaining competition, safeguarding consumer interests, and ensuring freedom of trade in Indian markets.
Google Play Store Introduces Three-Tiered Payment Billing Policy
In January 2023, Google announced the changes it planned to implement to comply with the antitrust orders. However, these changes have been criticised for failing to meet the CCI’s requirements.
Following the CCI’s decision, the company set a deadline of April 26, 2023, for Indian developers to comply with this rule and implement any of the three billing policies.
1. They can integrate Google Play’s billing system, which allows them to transact easily with millions of customers globally, providing their users with secure payment methods and centralised payment management.
2. They can offer an alternative billing system alongside Google Play for users in India. App developers looking to expand in international markets can also enrol in Google’s user choice billing pilot, currently available in 35 markets.
3. They can operate on a consumption-only basis without paying a service fee, even if it’s part of a paid service. With this option, any developer can allow users to log in when the app opens and access content paid for elsewhere.
The company announced it would begin to reach out to developers who still need to comply with its Play Billing policies.
Currently, these policies impose a 15% service fee on apps that earn less than $1 million per year, and this fee increases to 30% for apps that make more than that.
In its blog post, Google estimated that only about 60 of the 200,000 developers using the Play Store qualify for the 30% fee.
Google offers a discount for apps that use third-party billing systems, charging them 11% and 26%, respectively, a 4% discount from the standard rates.
Google’s Enforcement of Play Store Policies
Google stated that most developers globally have already complied with one of the options provided by their policies. For those in India who still need to implement these options, Google will take the necessary steps to ensure the fair application of their policy.
- The company will continue to comply with local laws and cooperate with local proceedings as required.
- Actions against developers who do not comply could range from halting app updates to removing an app from the Play Store.
- Android apps distributed through the Play Store use Google’s systems for over-the-air updates, which deliver new features and bug fixes to users.
- Google has previously stated that it charges a fee from developers for using critical services provided through the Play Store, such as payments, updates, and security.
Disney+ Hotstar & Indian OTTs Faces Increasing Difficulties
Disney+ Hotstar is already experiencing a downturn in subscriber numbers and average monthly revenue and considering changing its policies, like enforcing password restrictions.
Now the enforcement of Google’s new billing policy could heighten these difficulties. It is still uncertain how they will tackle this scenario and offset potential negative repercussions.
With content production, licensing, and distribution costs increasing, it is pretty hard to imagine that an OTT will part with 30% of its monthly subscription fee to Google instead of using a 3rd party PG who might charge anywhere between 2 – 5%.
Ragul Thangavel
With over nine years of diverse professional experience, Ragul has made significant contributions across various domains, including Media Operations, OTT Technologies, Video Production, Ecommerce, and Social Media.
Holding an Engineering degree, Ragul's career took an unconventional turn when he discovered his passion for writing, leading him to begin his journey as a content writer.
His career has been exclusively dedicated to the growth and development of startups, where he has played a pivotal role. His unique blend of technical knowledge and creative prowess has enabled him to drive innovation and success in every venture he has been a part of.