Technology policy and regulation in India have been rapidly evolving in recent years as policymakers and
corporate leaders grapple with complex issues on everything from social media to data protection to
cryptocurrency. As more and more people build their livelihoods through technological skills and tools, the
Government of India has been working to ensure an effective balance between national interests, commercial
interests, and individual interests. In part, this means ensuring that powerful international companies are
operating fairly and ethically in relation to the users and companies that rely on the platforms provided by these
tech giants to sell and market their products and make a living. Recently, this has played out in several major
investigations by the Competition Commission of India (CCI). In the first case, the CCI found Google’s new
Play Store billing guidelines “unfair and discriminatory” due to the proposed requirement for users to employ
Google’s own payment system. The company has also been the target of multiple other investigations into
monopolistic practices in several different sectors over the last several years. Likewise, Apple is in the midst of
an ongoing investigation into its payment policies, which mirror those of the Play Store. These and other similar
cases could have a wide-ranging impact on India’s digital ecosystem and the technology entrepreneurs working
within it and will likely shape potential upcoming amendments to the CCI Act. Overall, this is an opportunity
for the government to ensure fair practices and robust competition that will continue to foster an innovative
digital ecosystem that attracts international and domestic investors.
In September 2020, Google released an update to the billing guidelines of its Play Store, the official app store
for Android devices, which stated that developers listing their apps on the Play Store would be required to use
the company’s own payments system (Google Pay) for all in-app purchases made by users. In using Google’s
payment system, developers would then be charged 30% of each in-app purchase as a mandatory fee on all
transactions. Previously, app developers could use various other third-party payment systems that took
significantly smaller commissions and allowed greater choice and competition in the digital marketplace.
The backlash to the announcement from the developers, start-ups, and many other smaller companies that rely
on reaching the two billion monthly active users of the Play Store and the revenue generated through in-app
purchases was swift in India and worldwide. The new requirements were seen as a major digital pitfall that
would limit the growth of nascent digital companies and independent entrepreneurs, harming India’s tech
ecosystem and startup culture as a whole. In response to the outcry, the tech giant pushed its compliance date
back to March 2022 and then to October 2022 and lowered the commission from 30% to 15% for developers’
first $1M earned through the app store.
In the meantime, the CCI began its investigations into the policy in November 2020, prompted by requests from
the Alliance of Digital India Foundation, a newly-formed coalition of more than 350 tech startups and
entrepreneurs seeking to promote fair practices and foster a healthy digital ecosystem for small, innovative tech
ventures. The CCI’s probe was completed in March 2022; the updated billing requirements were found to be
“unfair and discriminatory.” The CCI report went on to state that “Google’s conduct is also resulting in a denial
of market access to competing for UPI [Unified Payments Interface] apps…[which] will lead to a situation
where Google Pay’s competitors will be completely excluded from the market in the long run.” Other issues of
concern cited by the commission include the fact that Google did not use its payment system for some of its
own apps despite mandating it for others; no additional services are provided in return for the commission fee;
and additional allegations that Google manipulated search results to push Google Pay.
Further hearings on the issue are set to begin soon, which will include an opportunity for Google to formally
respond to the allegations and the CCI’s findings while additional investigations are looking into Google’s news
aggregation systems and its practices in the smartphone and television markets. Apple, which also mandates the
use of its own payment system, charges a 30% commission on in-app purchases; because Apple only holds a
roughly 2% market share in India, Google has a much bigger priority for the commission. Further investigations
are being conducted into policies at Amazon, Meta, Flipkart, and others as well.
India is a massive and massively lucrative market for tech companies of all sizes. The country’s large and
relatively tech-savvy young population is increasingly online, and the country’s smartphone market was valued
at $139 billion in 2021. Furthermore, recent crackdowns on the tech sector by the Chinese government,
including new regulations on data protection and anti-monopoly legislation, have curtailed investment from
international tech companies and venture capital firms. As a result, as international investment in Chinese tech
startups fell sharply, Indian tech startups saw an increase in investment from $1.4 billion to $8 billion between
June and July 2021. Apple recently announced it would begin manufacturing the iPhone 13 in India to reduce
its reliance on China; the Government of India has also put incentives in place to encourage smartphone
manufacturing in the country. And despite the numerous CCI investigations, Google has stated that it will
continue to focus on accelerating growth and investment in the Indian market and will be opening its
second-largest global campus in Hyderabad.
While China’s crackdown on tech companies has seemingly sacrificed a substantial portion of its own economy
to the benefit of Indian tech companies, startups, and manufacturers, it also holds valuable lessons for India as it
pushes back against tech company practices and policies. China’s new regulatory requirements are good for
consumers and individual users as well as for domestic companies and startups that have to face less
competition from international companies unwilling or unable to update data protection policies or other
practices. Even as international investors shift some of their money to India or elsewhere, 2021 was still a
near-record year for foreign capital raised by Chinese tech companies. The size of the Chinese economy and the
Chinese market not only means that investment will continue regardless, but it also gives China significant
leverage in enforcing its regulations. Furthermore, preventing monopolistic business practices forces companies
to innovate and improve their products rather than compel usage or buy competitors.
India has an exceptional and unique opportunity to leverage the power of its market in the same way, reining in
international tech companies, promoting domestic ones, and incentivizing startups and innovators all while
taking in and encouraging significant investment. The Indian market, as it is and in its future growth, is too
important to the future of companies like Google and Apple for them to refuse to comply with regulations
around payment policies and anti-monopoly measures. In 2021, the Government of South Korea ruled against
both companies and issued requirements that they allow third-party payment systems on their app stores; both
companies complied.
While the results of the CCI investigations are not formally binding, they may set the stage for cases to be
brought to the Supreme Court and the expert opinions of the CCI members may be cited in any legal decisions.
Additionally, a Parliamentary Committee is set to convene in May, and invitations have been issued to the
leaders of all tech companies under investigation to participate in discussions around the future of competition
regulations. These discussions, along with the CCI findings, will inform the creation of a bill to amend the CCI
Act that is expected to be tabled in the near future; last updated in 2007, the CCI Act critically needs to be
brought up to date to provide a legal framework for a rapidly changing technological world. Regardless of the
passage of a future amendment, however, there is international precedent showing that the Government of India
can hold firm with big tech, ensure compliance, and foster a booming digital ecosystem at the same time.