Yesterday, industry leaders heading India's prominent digital-first companies attended a Parliamentary Standing Committee on Finance. BJP leader and former Union Minister Jayant Sinha chaired this closed-door meeting that probed various aspects of competition in the marketplace.
Those present at the three-hour session included Ola CFO Arun Kumar, Make My Trip Chairman and Chief Mentor Deep Kalra, Zomato CEO Deepinder Goyal, Oyo founder and Group CEO Ritesh Agarwal, Swiggy's Vice President and Group General Counsel Avantika Bajaj, Flipkart Group CEO Kalyan Krishna Murthy, All India Gaming Federation' CEO Roland Landers and Paytm's founder Vijay Shekhar Sharma.
It dwelled on various complaints that the Competition Commission of India (CCI) has received against several ecommerce players for alleged unfair business practices. These include predatory sales tactics, deep discounting and leveraging their monopolistic standing to impose unilateral terms while competing with traditional players.
The National Restaurant Association of India (NRAI), for instance, has alleged that Zomato and Swiggy levy heavy commissions on restaurants, limiting the entry of new players. It also claimed that the food delivery platforms leveraged their monopolistic position to bundle food ordering and delivery services, disallowing restaurants from using their delivery personnel. Moreover, not sharing customer details with restaurant partners made the latter further dependent on the aggregators for repeat orders.
Do Apple and Google Have An Upper Hand?
Interestingly, while trade bodies and industry stakeholders have been complaining against these ecommerce companies, some start-ups have also been at the receiving end of 'anti-competitive practices' from global players. The CCI has been investigating tech giants including Amazon, Apple, Google and Facebook over allegations of misusing their dominant position in its bid to protect indigenous ecommerce companies and smaller businesses.
In September 2020, Google announced that apps on its Play Store must use the Google Billing and Payment system for certain in-app purchases, which charged a 30 per cent commission. Apple too, mandated the use of its in-app payment system, which sets up to 30 per cent commissions.
According to The Alliance of Digital India Foundation (ADIF), several Indian developers objected to this substantial commissions and the lack of choice in picking a payments system, calling these policies unreasonable. "Google's new rules could significantly dent developers' profit margins, affecting both business viability and innovation," it said in a report.
Following backlash from the Indian developer community, Google deferred the enforcement of a 30 per cent commission on in-app purchases from its Play Store in India to October 2022. A Google spokesperson told Outlook Business, “We charge a service fee for the extensive services we offer on Google Play: less than 3% of our developers globally pay a service fee, 99% of whom qualify to pay 15% or less. The Google Play billing system provides a simple, safe way for consumers to transact.”
The company further added that the service fee supports its continued investments across Android and Google Play. This allows for a range of distribution, development, and security services, and reflects the value it provides to consumers and developers.
Unimpressed, in January 2022, CCI began investigating whether payment policies by big tech companies like Apple and Google hurt local app developers, big and small. According to recent reports, its Additional Director General found Google's contentious payments policy for Play Store developers to be "unfair and discriminatory".
Clash Of The Apps Titans
In September 2020, Google removed the Paytm app from its Play Store for repeatedly violating its anti-gambling policies, though this was reinstated within hours. Without missing a beat, Paytm Founder and Chairman Vijay Shekhar Sharma launched the Paytm Mini App Store on 4 October 2022 to empower Indian developers to leverage Paytm's reach and payments to build new innovative services.
In a blog post, he wrote, "Mini Apps are a custom-built mobile website that gives users an app-like experience without having to download them, which would greatly benefit millions of citizens to save their limited data and phone memory. It will enable small developers and businesses to set up low-cost, quick-to-build mini-apps which can be built using HTML and Javascript technologies."
Paytm promised to provide listing and distribution of these mini apps within the app without any charges. For payments, developers could offer their users options like Paytm Wallet, Paytm Payments Bank, UPI, net-banking and cards.
In the same month, Sharma and founders of other start-ups, including Ashish Dahiya of Policy Bazaar, Murugavel Janakiraman of Matrimony.com, Farid Ahsan of Sharechat and Vishwas Patel of CCAvenue approached the Ministry of Electronics and IT (MeitY) to raise concerns around Google's Play Store billing policy.
The Big Fight
Paytm has been taking the battle to Google's playground to hold its position in the growing digital payment space. UPI recorded 452 crore transactions in February 2022 worth INR 8.26 lakh crore, according to the National Payments Corporation of India.
Flipkart-owned PhonePe led with Rs 4.07 lakh crore transactions, while Google Pay maintained the second lead with a transaction value of Rs 2.91 lakh crore. Paytm came next with transactions worth Rs 86,299 crore, followed by Amazon Pay at Rs 6,044 crore and Meta-owned WhatsApp Pay with transactions worth Rs 207 crore. As a homegrown company taking on global entities in India’s rapidly growing digital payments market, Paytm is unwilling to cede any ground, at least not without a fight.
With the CCI is investigating tech giants over their monopolistic approach, the government is also paying close attention to end anti-competitive practices in a hyperconnected economy. It is planning to give more teeth to existing competition laws.
The proposed Competition Amendment Bill, 2022 recommends changes to key provisions that can address the needs of the evolving internet-based market, with regulations for data usage and security. It also seeks to bolster the CCI’s team to deal with cases faster.
While summing up his meeting with the business leaders yesterday, Minister Sinha told Economic Times, "The standing finance committee is examining the digital economy and evaluating changes to competition law that takes care of issues posed by digital markets. The committee has held detailed discussions with the Ministry of Consumers Affairs and CCI on these issues." After getting the perspective of industry stakeholders, a meeting between the Parliamentary Committee on Finance and representatives of tech firms including Amazon, Google, Meta and Twitter is on the cards soon.
