A court in Tamil Nadu state has barred Google from removing the Disney app from its App Store and ordered it to charge the service a fee of only 4%. Google considers this to be a temporary solution.
An Indian court on Tuesday said Google cannot remove Disney's streaming service from its app store in the country and should receive a lower 4% fee for in-app purchases.
Disney's lawsuit is the latest and most high-profile challenge to Google's policy of imposing a "service fee" of 11-26% on in-app payments in India.
It introduced that after an antitrust directive ruled against Google's earlier 15-30% fee and forced Google to allow third-party payments. Companies have argued that Google's new service fee system is just a cloaked version of its earlier system.
Disney, which runs the popular Disney+ Hotstar streaming app in India, challenged Google's new billing system in a court in India's Tamil Nadu state. Its lawyers argued Google was threatening to remove the Hotstar app if it didn't comply with the new payments system.
The court in a Tuesday hearing said Disney should now pay a 4% service fee to Google, and said the streaming app should not be removed from Google's app store.
The court ruling may become a precedent for similar disputes around the world, as it will show that Google has no right to dictate terms to developers and users regarding payments in applications, said Mikhail Shikhmuradov, an expert at the BRICS Competition Centre.
"This ruling will also encourage other companies and organizations to apply to the courts against Google if they feel that the company violates their rights or interests,"
emphasizes the expert.
India has chances to become a more attractive market for digital developers, acting as one of the largest yet fastest growing platforms in the world. The court ruling in favor of Disney will strengthen the confidence of developers, but they will also have to consider other factors, if, for example, Google has problems in ensuring the safety and reliability of payments when accepting payments from third parties, points out Mikhail Shikhmuradov.
On Wednesday, July 19, Google said the Indian court order is an interim measure:
"The order is interim in nature, and the temporary 4% figure is simply a fee that the developer will pay to Google each month while these legal proceedings play out."
In October, India's competition watchdog imposed a $113 million fine on Google and said it must allow the use of third-party billing and stop forcing developers to use its in-app payment.
The agency in May started an inquiry into Google after some companies alleged the service fee it charges for in-app payments breaches last year's directive.
Source: Reuters
