Google makes policy changes to accommodate CCI directives

In deference to the Competition Commission of India's directives, Google said in a blog on Wednesday that it will make "some key changes" such as allowing handset makers to license individual Google apps for pre-installation on their devices, providing Indian users with the option to choose their default search engine, updating the Android compatibility requirements to introduce changes for partners to build non-compatible or forked variants, and providing a user choice billing to all apps and games starting next month.

Google's move comes less than a week after the Supreme Court denied its plea to grant a stay on CCI’s October order, fining the company ₹1337.76 crore for abusing its dominance in the Android market. The CCI order flagged key agreements Google makes with developers, and said that they violate competition norms, directing the company to make appropriate changes.

In its blog post on Wednesday, Google said it will continue to “respectfully appeal” certain aspects of the CCI’s decisions, but will also make changes in the meanwhile, specific to India. The post, however, added that “Implementation of these changes across the ecosystem will be a complex process and will require significant work at our end and, in many cases, significant efforts from partners, original equipment manufacturers (OEMs) and developers.”

Among the key changes, Google will now allow device makers (also known as original equipment manufacturers) to license individual Google apps for pre-installation on their devices in India. In addition, Indian users will now have the option to choose a default search engine via a “choice screen” that will start to appear when a user sets up a new Android smartphone or tablet in India.

Furthermore, the company said it will offer “user choice billing” for all apps and games from next month, which will allow developers distributing apps through the Play Store to choose payment options other than Google’s own ones. 

While this wasn’t part of the directives in CCI’s October order, the competition regulator had levied another fine of ₹986 crore on Google in November on this particular issue. The payment issue has also been flagged, on multiple occasions, by notable startup founders in India, including the likes of PayTM’s Vijay Shekhar Sharma, Razorpay’s Harshil Mathur and Matrimony.com’s Murugavel Janakiraman.

Lastly, the company said it has made changes to Android’s “installation flow” for sideloaded apps. This was part of a recent Android update, as part of which the Android platform will be able to flag if sideloaded apps are known to be malicious. So far, Android used to flash a warning message to users if a sideloaded app was being installed. Now, the platform can also flag whether these apps are already known to be malicious.

Sideloading is the practice of downloading apps from outside the Google Play Store, through websites, other app stores etc. Android used to display a warning message informing users that third-party downloads could lead to malicious programs on their phones.

The announcement is already being met with positive response from the industry as well. “This is a fantastic development and a win for the entire startup ecosystem and the IT industry at large to convince Google to allow multiple payment gateways in the app store,” said Ajay Data, Secretary General, Alliance of Digital India Foundation (ADIF), a startup industry body.

Not everyone is convinced yet, however. Rohan Verma, CEO and Executive Director of MapmyIndia, said, “Google is trying to show that they are making changes - but fact is these are piece meal, and also being done in the way Google wants - and the outcome of this will not lead to on-ground impact of enhancing competition.”

MapmyIndia and IndusOS were the two companies that filed impleadment actions against Google at the Supreme Court’s hearing last week. “In Europe also Google has been following this play book of making cosmetic changes. So no, the changes they are proposing are not meaningful enough. They should comply and change in letter, and spirit, and in time - to the CCI directives,” Verma added, noting that all 10 of the CCI’s directives need to be followed in order to have an impact on the market.

Rameesh Kailasam, President and CEO of startup industry body Indiatech.org, also said that the move is a “partial step” in the right direction. “However, it’s important to note that Google has not clarified what commissions it will continue to charge, even as it opens up third-party payment instruments for user-choice billing,” he noted.

He added that “the bigger issue” was the amount of fee Google charged from third-party payment services too. “While an alternate choice’s availability is fine, the most important bit is to understand the commission that Google will continue to charge. If it is still as high as 26% for third parties, it will remain futile for developers,” he said.

Questions are also being asked about whether the changes will stick in future. Anisha Chand, Partner, Competition/Antitrust at law firm Khaitan and Co, said that this is a “seminal change” but noted that it was also inevitable. However, she pointed out that since the case remains under appeal at the National Company Law Tribunal (NCLAT) right now, “which may continue for at least the next two or three years”, it is unclear whether the changes will remain if Google wins.

“If Google wins at that point, we remain unclear on whether these market changes, which everyone will get used to by then, would be rolled back,” she said.

“It is a welcome move as long as there is no hidden caveat. I hope this also makes Apple do something similar since CCI is also investigating Apple,” said Murugavel Janakiraman CEO, BharatMatrimony. Razorpay’s Mathur said that the step will give a choice to app makers for what payment system to use, and open opportunities for Indian payment companies to participate in the ecosystem.