NEW DELHI — The Supreme Court on Tuesday, November 3, questioned app developers whether their contracts with Google allowed them to opt out of its payment system and engage other payment service providers, LiveLaw Biz reported. A bench of Justices P.S. Narasimha and Alok Aradhe asked the developers' counsel, 'Can you opt out of the payment system in your contract?' The court was hearing the developers' challenge to the Madras High Court's January 19, 2024 judgment upholding the rejection of their suits against Google over its Google Play Billing System, User Choice Billing policy and related payment terms; the lead case is Mebigo Labs Private Limited v. Google India Private Limited (Diary No. 3991/2024).

Source: LiveLaw Biz

Counsel for the developers submitted that they could choose not to use Google Play Billing and instead engage alternative providers — but that, because of the change in the 'authorised provider' definition, Google was in effect forcing them to use either its own system or one authorised by it. Before Google changed its policy, developers could independently enter into arrangements with payment providers such as Razorpay and Paytm, counsel said, adding: 'As an app developer, I could contract any payment processor.' The developers have particularly challenged the definition of 'Authorised Provider' — introduced into Google's contractual terms on October 3, 2022 for a third party authorised by Google to process payments for products sold on Google Play — and Clause 15.3, alleging that the provisions impose restrictive payment terms and charges in violation of the Payment and Settlement Systems (PSS) Act, 2007 and RBI guidelines.

Source: LiveLaw Biz

Appearing for Google, Senior Advocate Sajan Poovayya argued that the developers were attempting to give a contractual colour to what was essentially a competition law dispute. He submitted that the Competition Commission of India (CCI) had already examined Google's Play Store billing policies and service fees under Section 27 of the Competition Act and had found the fees were neither unreasonable nor excessive, and that the developers could not circumvent the CCI's findings by presenting substantially similar grievances as contractual disputes. The bench, however, questioned whether the CCI had specifically examined the contractual clauses now under challenge and whether the disputed fee provision formed part of the original agreement; Poovayya maintained that the relevant issues had already been raised before and considered by the CCI.

Source: LiveLaw Biz

Resuming his submissions, counsel for the developers argued that the Madras High Court had erred in holding that their civil suits were barred by the PSS Act: Section 24 of the Act does not expressly bar civil court jurisdiction but provides a mechanism for resolving disputes between system participants, and app developers are not system participants but merely users of payment systems — 'We are not even a system participant. We are users of that entire system,' counsel submitted. The developers also raised independent contractual and civil law claims involving novation, tortious interference with contractual relationships, undue influence, restraint of trade and the enforceability of terms under the Indian Contract Act, LiveLaw Biz reported.

Source: LiveLaw Biz

MediaNama, reporting the same hearing, explained why the outcome matters: the Supreme Court will decide where developers can fight Google's billing terms — if it allows the suits, developers can argue in civil courts that the terms are unenforceable under contract law; if it does not, they are left with the CCI and the RBI. Google charges developers a commission of 15% to 30% on Play Billing; since January 2023 developers in India have been allowed to offer an alternative billing system alongside Google's, but Google still charges 11% to 26% on payments made through those alternative systems, MediaNama noted. In March 2024 Google removed apps including Matrimony.com, Shaadi.com, Naukri and Kuku FM for not complying with its billing policy, before reinstating them. After hearing the parties on Tuesday, the court posted the matter for further hearing on December 1. Sources: LiveLaw Biz; MediaNama.

Source: MediaNama