“There is nothing palpable or ex facie evident to clinch beyond reasonable doubt that Google acts as PA by handling end-to-end payment mechanisms from merchants to customers.”
The App developers recently brought a case before the Calcutta High Court (“CHC”) regarding the new payment terms introduced by Google. These developers had previously approached the Reserve Bank of India (“RBI”), the Competition Commission of India (“CCI”), and the Madras High Court (“MHC”) in their dispute against Google.
While the matter awaits adjudication by the RBI and CCI, the MHC, in an Order dated 19.01.2024, declined to intervene, noting that similar information was already under consideration by the CCI. However, the recent dismissal of the writ by the CHC included some initial observations that are likely to favor Google in future proceedings before the CCI and RBI.
This suggests that the App developers’ attempts to navigate different legal avenues have not yielded the desired results.
BACKGROUND
The Plaintiffs were affected by Google’s payment terms policies relating to Service Fees, Terms and Conditions relating to the implementation of Google Play Billing System (“GPBS”)/User Choice Billing (“UCB”)/Consumption-Based Model vis-à-vis the Android based Mobile Application, as implemented by Google.
The plaintiffs further sought a declaration before CCI, MHC, RBI, and CHC praying that the definition of “Authorized Provider” and Clauses 15.3 of the Developer Distribution Agreement (DDA), effective as of 03.10.2022, as unconscionable, illegal, and unenforceable and prayed for a consequential relief for permanent injunction, against the defendants, Google.
Litigation before MHC
The MHC dismissed the civil suit observing that it lacks jurisdiction on the original side to admit a civil suit for declaration against the terms and conditions of the payment/billing arrangements between the App developers and Google and also due to the statutory bar against pending information filed by the App developers on the similar grounds before the CCI.
Investigation before CCI
On 15.03.2023, CCI ordered an investigation under Section 26(1) on the issue of fair pricing vis-à-vis abuse of the dominant position of Google GPBS, UCB, and DDA. However, the CCI through an order dated 20.03.2024 refused to grant any interim relief to the App developers.
Investigations before the RBI
The written representation was filed by the app developers on 19.02.2024, the RBI served notice to Google and has held two sittings.
PRESENT LITIGATIONS BEFORE THE CHC
The OTT platform provider Hoichoi Technologies Private Limited, along with its director, filed a writ before the CHC praying for similar relief as prayed before the MHC by other app developers. The CHC, making similar observations as the MHC, dismissed the writ.
However, the CHC made ex-facie (“on the face”) observations stating that the Google Play Developer Distribution Agreement outlines the terms under which developers can distribute their apps via Google Play.
The CHC observed that essentially, App developers are charged service fees only when they choose to monetize their apps on the platform; no fees are charged for apps offered for free. These service charges cover the costs associated with displaying, making apps available for download, and facilitating purchases within the platform.
Furthermore, the CHC emphasized that Google doesn’t function as a payment aggregator (PA) according to the agreement with Google Payment Corporation. While Google Play offers various payment methods, including Google Pay, as well as credit/debit cards, it doesn’t directly handle the processing of payments itself.
The CHC observed that despite claims made by petitioners, there isn’t conclusive evidence to suggest that Google is acting as a PA by managing end-to-end payment transactions. Instead, Google Play primarily serves as a platform for hosting apps and facilitating transactions between developers and users.
The CHC was satisfied that Google has made out a reasonably satisfactory prima facie case of charging only service charges for hosting the Applications when the said Apps earn money by using the platform provided by Google and it only provides users of the online platform across devices to host developers and app operators.
Furthermore, the CHC observed that “there is nothing palpable or ex facie evident to clinch beyond reasonable doubt that Google acts as PA by handling end-to-end payment mechanisms from merchants to customers.”
However, the CHC clarified that even though various payment apps are displayed on Google Play, which is a recognized payment aggregator in India, this doesn’t automatically classify Google or its affiliated companies as PAs, and the issue at hand is complex and should be addressed by regulatory authorities such as the Reserve Bank of India (RBI) and the Competition Commission of India (CCI), as they have the expertise and jurisdiction to handle such matters.
Therefore, the CHC was of the view that it would be premature for the court to intervene and pass interim orders based solely on the arguments presented.
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