Winzo Games Pvt Limited vs Google LLC [Case No. 42 of 2022, CCI]

By Manvee

Facts of the Case

Winzo Games Pvt. Ltd. (the Informant) filed a complaint under Section 19(1)(a) of the Competition Act, 2002 against Google LLC and its affiliates, alleging violations of Section 4 of the Act. The Informant, a digital gaming company operating the ‘WinZo’ platform, claims that Google imposes unreasonable terms through its Developer Distribution Agreement (DDA) and Developer Program Policies (DPP) for hosting apps on Google Play. Specifically, Google restricts hosting Real Money Games (RMGs) on the Play Store, forcing developers to offer such apps through sideloading, which includes a misleading warning that harms the Informant’s reputation.

Further, the Informant alleges that Google displays arbitrary payment warnings when users attempt to use ‘Google Pay’ for transactions related to real money games. These warnings are claimed to be baseless and unsubstantiated by any regulatory body like NPCI. Moreover, Google’s policy update in 2022, which only allowed Daily Fantasy Sports (DFS) and Rummy games on Play Store, is seen as discriminatory and an abuse of dominance.

The Informant also challenges Google’s restrictive advertisement policy, which limits ads for RMGs to DFS and Rummy apps, excluding others like WinZo. The Informant argues that Google holds a dominant position in both the mobile operating system and app store markets and has violated Sections 4(2)(a)(i), 4(2)(b)(i), and 4(2)(c) of the Act, seeking an inquiry and interim relief.

Issues Raised

1. Google restricts hosting real money games (RMGs) on Google Play, forcing developers to offer apps through sideloading, affecting accessibility and growth.
2. Google displays misleading warnings when users download the Informant’s app or make payments through Google Pay, harming the Informant’s reputation and business.
3. Google’s 2022 Pilot Program only allows Daily Fantasy Sports (DFS) and Rummy games on Play Store, excluding other skill-based RMGs, creating an uneven playing field.
4. Google restricts RMG advertisements to DFS and Rummy apps only, limiting the Informant’s ability to advertise and compete effectively.
5. Google’s practices in the mobile OS and app store markets are alleged to constitute abuse of its dominant position, violating provisions of the Competition Act, 2002.

CCI’s CONSIDERATION

The Competition Commission of India (CCI) considered the matter and sought responses from Google regarding the Informant’s application for interim relief under Section 33 of the Competition Act, 2002. Google was also directed to submit answers to certain queries from the CCI. Both parties duly filed their responses, with further submissions made during the proceedings. Additionally, the CCI sought inputs from the Ministry of Electronics and Information Technology (MEITY) regarding permissible real money gaming (RMG) applications on Indian app stores. MEITY provided its response on 23.04.2024. On 24.07.2024, the CCI decided to hold a preliminary conference with both parties on 11.09.2024. The Commission heard oral arguments from the parties and allowed them to file a brief synopsis of their arguments within 10 days. Post-hearing submissions were received and considered by the CCI, which decided to pass an appropriate order in due course.

CCI’s ANALYSIS

The Informant alleges that Google’s app store, payment, and advertisement policies violate Section 4 of the Competition Act, 2002. The first step in analyzing these allegations is to identify the relevant markets and assess Google’s dominance within them.

The Informant identified two relevant markets: (1) the market for licensable Operating Systems (OS) for smart mobile devices in India, and (2) the market for application stores on devices with licensable OS in India. The Commission had previously defined these markets in the Google Android Case (Case No. 39 of 2018) and the Google Play Case (Case Nos. 07 of 2020, 14 of 2021, and 35 of 2021), finding Google dominant in both.

Additionally, the Informant raised concerns about Google’s online search advertisement policies, prompting the Commission to consider a third relevant market: the market for online search advertising services in India. The Commission had defined this market in the Matrimony.com case (Case Nos. 07 & 30 of 2012) and found Google dominant. The Commission believes the delineation of these markets and Google’s dominance remains valid, and no new information has been presented to change this position. Therefore, the Commission is of the prima facie view that the relevant markets in this case are: (a) licensable OS for smart mobile devices, (b) app stores for Android devices, and (c) online search advertising services, with Google being dominant in all three.

1. Listing of Real Money Gaming (RMG) Apps on the Play Store

The Informant alleges that Google’s Developer Distribution Agreement and Policies prevent third-party gaming apps offering real money games of skill (RMGs) from being listed on the Google Play Store. The Informant claims this is an unjustified denial of market access and constitutes unfair or discriminatory conditions under Section 4(2)(c) and Section 4(2)(a)(i) of the Competition Act, 2002, despite RMGs being legal as per the Supreme Court’s judgment.

Google’s Submission

In response, Google argues that the regulatory framework for online gaming in India is fragmented, with different states having varying laws on gambling. Google asserts that “Games of Skill” are not defined uniformly across states, and offering RMGs could expose them to legal risks. Furthermore, Google refers to the Amended IT Rules of 2023, which propose the creation of Self-Regulatory Bodies (SRBs) to certify permissible RMGs, but these bodies have not yet been established. Google claims that this uncertainty and the potential risks, including money laundering concerns and lack of safeguards for users, justify its cautious approach, including a short-term pilot program to assess the RMG landscape in India.

Winzo’s Rejoinder

The Informant counters that the Supreme Court has upheld skill-based games as a valid business activity under Article 19(1)(g) of the Constitution, and that its games meet the criteria for “Games of Skill.” They argue Google’s refusal to host their games lacks justification in the absence of any adverse judicial finding.

The Commission notes that the distinction between “Games of Skill” and “Games of Chance” requires case-by-case examination, and acknowledges the ongoing legal process the Informant has initiated in the Delhi High Court. The Commission also considers the proposed SRB framework by MEITY under the Amended IT Rules, which, once implemented, could clarify the regulatory landscape. Given the evolving nature of the legal framework, the Commission refrains from intervening at this stage on this issue.

• RMG Pilot

The Informant alleges that Google’s Pilot Program for real money games (RMGs) on the Play Store, which ran from 28.09.2022 to 28.09.2023, selectively allowed only Daily Fantasy Sports (DFS) and Rummy games, resulting in unfair market conditions. The Informant argues this preference is arbitrary and discriminatory, limiting the market access for developers of other types of RMGs and causing significant financial harm, including high user acquisition costs. The Informant claims that this conduct violates Sections 4(2)(a)(i), 4(2)(b)(i), and 4(2)(c) of the Competition Act, 2002.

In response, Google explains that the Amended IT Rules, which came into effect in April 2023, necessitated the pilot to gain insights into the RMG landscape in India. The pilot, initially set to run for one year, was extended indefinitely due to regulatory uncertainty and feedback from developers. Google maintains that the selection of DFS and Rummy was based on their popularity and the higher degree of legal certainty regarding their classification as “Games of Skill,” as recognized by Indian courts. Google claims the pilot was implemented fairly without discrimination between DFS and Rummy apps.

The Informant, however, disputes Google’s justification, alleging that the preference for DFS and Rummy is arbitrary, not substantiated by data, and excludes a larger portion of the RMG market. They argue that DFS and Rummy, combined, have less than 20% market penetration, and Google failed to provide evidence showing these categories as the most popular or widely used RMGs. The Informant asserts that Google’s conduct results in an appreciable adverse effect on competition and denies market access to developers of other RMG types.

The Commission notes that Google Play Store is a dominant platform, and exclusion from it represents a significant disadvantage for developers, potentially leading to a denial of market access. The Commission also emphasizes that pilot programs must be carefully scrutinized, especially when they are rolled out by dominant players in the market. It observes that the selective onboarding of RMG apps for the pilot program may distort competition and disadvantage non-DFS and non-Rummy apps by providing the former a competitive edge, such as increased visibility and user base.

The long duration of the pilot program, extended indefinitely, also raises concerns about the perpetuation of these advantages for DFS and Rummy apps. The Commission points to the significant user traction gained by Dream11, the leading DFS app, during the pilot, further highlighting the anti-competitive effects.

Given the selective nature of the pilot, its long duration, and its potential to distort competition, the Commission finds a prima facie violation of Section 4(2)(c) (denial of market access) and Section 4(2)(a)(i) (unfair conditions) of the Competition Act. The Commission also notes that this practice may limit the technical development and provision of other RMG apps, violating Section 4(2)(b) (limiting provision of services). Therefore, the Commission recommends a detailed investigation into these practices.

• Google Ads Policy Permitting Advertisements for Only Daily Fantasy Sports (DFS) and Rummy Gaming Applications

The Informant has alleged that Google Ads, a significant online advertising platform, restricted the ability of app developers to advertise their skill-based games on Google and YouTube, platforms offering vast reach in India (467 million users on YouTube alone). Previously, Google Ads allowed advertisements for all types of skill-based games, including the Informant’s casual gaming application, but since November 21, 2022, following the introduction of the RMG Pilot Project, Google modified its policy to only permit advertising for DFS and Rummy apps. As a result, the Informant’s ads were disapproved, blocking them from using their trademark “WinZO” in Google Search ads, while competitors in the RMG sector (such as DFS and Rummy apps) continue to advertise on the platform. The Informant claims this restriction is anti-competitive, as it hinders their ability to compete by blocking a major advertising channel, leading to business losses, as 68.21% of their app installs came from Google Ads.

Google has responded by stating that its Ads Policy is clear and uniform, only permitting ads for games of skill that do not involve the opportunity to win real-world value, in line with local laws. Google further asserts that its decision to allow DFS and Rummy ads stems from Indian case law that classifies these as skill-based games. Google also denied altering its Ads Policy in November 2022, asserting that it had extended its policy earlier, in February 2022, due to changes in local laws. Regarding the keyword bidding issue, Google pointed to a previous Commission ruling (in the Matrimony case) to argue that the policy on bidding on competitor trademarks had been thoroughly examined and does not warrant further investigation.

In the rejoinder, the Informant has emphasized its reliance on Google Ads, highlighting the substantial impact of the policy changes on its business. The Informant also raised concerns regarding the potential misuse of Google’s keyword bidding system, which enables competitors to bid on their trademark, thus infringing on trademark rights. Google, on the other hand, argued that its policies are applied uniformly across the board.

The Commission notes that Google’s dominant market position (approximately 95% in the search engine market) makes its advertising platform crucial for app developers seeking visibility and user acquisition. The Informant’s allegations suggest that Google’s restrictions on advertising are potentially anti-competitive, limiting market access for certain RMG apps and impeding competition. Moreover, the selective allowance of DFS and Rummy ads raises concerns of discrimination and selective enforcement of policies, which may violate competition laws, specifically Sections 4(2)(b) and 4(2)(c) of the Competition Act. The Commission also highlights the inconsistency in Google’s position, given that it has permitted DFS and Rummy ads despite legal and regulatory uncertainties regarding the classification of RMGs.

Finally, the Informant claims that Google has permitted other gaming platforms (like Zupee and MPL) to run ads, further suggesting selective enforcement and preferential treatment. Google contends that its Ads Policy is enforced without discrimination, pointing out that violations of its policy by these platforms had been flagged and addressed. The Commission’s inquiry into these claims will focus on whether Google’s policies are applied fairly and consistently, and whether its restrictions on advertising violate competition law.

The Commission concludes that there are prima facie concerns that Google’s practices may limit market access and restrict competition, necessitating a thorough investigation. However, the issue of keyword bidding raised by the Informant has already been addressed in a previous Commission ruling and does not warrant new consideration. The Commission is not positioned to adjudicate the trademark-related issues, which are more appropriate for trademark law authorities.

• Google’s Warnings on Sideloading Real Money Gaming Apps

The Informant has raised concerns about Google’s policy regarding the hosting of real money games (RMGs) on the Play Store, alleging that Google restricts these apps from being listed on the store, forcing them to be downloaded via sideloading from their websites. When users attempt to sideload the Informant’s app, Google displays malware warnings, which the Informant argues are misleading and harmful to their reputation. The Informant claims that these warnings create an entry barrier for users who lack technical knowledge and would be deterred by the risk of malware, ultimately resulting in business loss. The Informant contends that Google’s conduct is unfair and discriminatory, violating Section 4(2)(a)(i) of the Competition Act by imposing unfair conditions and contravening Section 4(2)(b)(i) by limiting the provision of services.

Google, in its response, references a ruling by the Hon’ble NCLAT in March 2023, which held that displaying warnings when sideloading is not abusive, provided sideloading is allowed, and such warnings are required under the Intermediary Rules. Google further asserts that these warnings are not discriminatory, nor are they disproportionate or illegal. The Commission notes that it has already examined the sideloading issue in the Google Android Case, issuing a directive preventing Google from restricting app developers’ ability to distribute apps through sideloading. However, the NCLAT overturned this directive in its March 2023 judgment, and the matter is currently under review by the Supreme Court. As the issue is sub-judice, the Commission has decided not to entertain the Informant’s allegations concerning sideloading at this stage.

Payment Warning

Another issue raised by the Informant concerns payment warnings issued by Google when users attempt to make payments through Google Pay to play skill-based games. The Informant claims these warnings are baseless and interfere with their legitimate business operations, imposing unfair conditions on the provision of services. Google, in response, asserts that the warnings are part of its compliance with fraud prevention measures mandated by the Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI). These warnings, according to Google, are based on transaction patterns, velocity checks, and other risk parameters, and are not specific to any merchant or consumer.

However, the Informant argues that such warnings are not displayed when payments are made for Rummy and DFS apps listed on the Play Store, suggesting selective enforcement by Google. Moreover, the Informant points out that other payment aggregators do not display similar warnings for its platform. The Commission has noted these submissions and considers it necessary to investigate whether the payment warnings are connected to Google’s selective inclusion of certain RMG apps (such as Rummy and DFS) in the RMG Pilot. The Commission also seeks to determine whether these warnings create an unfair competitive advantage, particularly given their potential impact on the market for real money games. Consequently, the Director General (DG) will further examine these allegations during the investigation.

CONCLUSION

The Commission, after considering the facts, has prima facie determined that Google may be in violation of Sections 4(2)(a)(i), 4(2)(b), and 4(2)(c) of the Competition Act, prompting the need for a detailed investigation. The Director General (DG) has been directed to investigate the matter under Section 26(1) of the Act, focusing on the issues identified, and to submit a consolidated report within 60 days. The Commission clarified that Google’s confidential submissions would not be deemed confidential for the purpose of the order. Additionally, the DG must conduct the investigation impartially, and the Secretary is directed to send the order to the DG and parties’ counsel.