Experts question Google’s action against Paytm

Business Line, September 20, 2020

Google’s decision to remove Paytm from the Play Store has raised questions around the search giant’s neutrality, considering its dominant position.

“To say that big tech platforms are also gatekeepers for apps and hold a responsibility to ensure legal compliance as well is a tricky balance,” said Akriti Gaur, technology lawyer and independent policy advisor.

Both Paytm and Google compete in the digital banking segment. Google operates Google Pay in India, similar to Paytm. So, in effect Google could be abusing its position of power, which impacts competition, opine legal experts.

‘Conflict of interest’

Android enjoys a 90 per cent share in India. “Such a conflict of interest is not healthy and requires constant attention from the Competition regulator,” said Santosh Pai, Honorary Fellow at the Institute of Chinese Studies.

Udai Singh Mehta, Deputy Executive Director, CUTS International, a think tank, is of the view that it raises questions about platform neutrality in the payments ecosystem.

On September 18, Google removed Paytm for a few hours, citing that the latter, with its Paytm First Games, had violated its policies pertaining to gambling. Google said in a blog post that it did not allow online casinos or support any unregulated gambling apps that facilitate sports betting. Subsequently, Paytm removed an offer that gave its users stickers, for payments and money transfers, which could then be used to redeem cashbacks, and was reinstated.

This, however, raises broader questions such as the one raised by Paytm founder Vijay Shekhar Sharma who has pointed out that the search giant is the ‘judge, jury and executioner.’

These issues resurfaced in August when Google was hit with a class-action antitrust lawsuit in the US for alleged abuse of its market power, including the exclusion of competition, the stifling of innovation, the inhibition of consumer choice, and Google’s imposition of a 30 per cent transaction fee on Play Store transactions on app developers.

Owner’s right?

So, as a platform owner, does Google not have the rights to impose certain policies?

“Every platform owner is free to impose policies for the use of its platform. Google Play policies for real money gambling, games and contests (which include fantasy sports) require such apps to be in compliance with local laws. Google is well aware that, having a dominant position in India, if it arbitrarily restricts applications providing competing services from the Play Store, without a compelling reason, then such action could be challenged as anti-competitive,” stated Anupam Shukla, Counsel, Pioneer Legal.

In India, fantasy sports are considered “games-of-skill” and not “games-of-chance” and are therefore not prohibited as per Centre’s gambling laws. Also, gambling is a State subject.

This also raises questions on consumer rights, and will more apps get removed? Buzz in the industry is that some other high profile apps, in the ongoing IPL, are under Google’s scanner. “Such issues will continue to play up, considering that every business forays into each other’s terrains,” said Lloyd Mathias, an angel investor and former head of marketing of HP.

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