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Updated: Feb 9

by Harshita Dixit *

The previous part of the blog briefly discussed the issues that came before the CCI in the cases of Google Pay and WhatsApp Pay. The second part of the blog shall critically analyze the contrasting decisions of CCI in both the cases and discuss the problematic reasoning of CCI for the regulation of UPI players.

Tying approach in WhatsApp Pay case

As per CCI, the practice of pre-installation of WhatsApp Pay with WhatsApp Messenger did not constitute tying because WhatsApp's payment feature could not foreclose competition in India due to the dominance of other UPI players in the market. CCI took this approach from the brick-and-mortar market and set the thresholds accordingly in the digital market, where the level of growth is different. The ruling of the European Union's Court of First Instance in the case of Microsoft v. Commission serves as an example of the need for a different threshold in the digital market. In this case, the pre-installation (bundling) of Microsoft's Windows Media Player was found to violate Article 102 of the Treaty on the Functioning of the European Union (TFEU). The court was of the opinion that the coercion should preferably be assessed when the product is sold rather than resulting from effects on consumer behavior after purchase of tied products.

While the commission rightfully acknowledged the status quo bias of the top UPI players like PhonePe and G-Pay, its approach in evaluating WhatsApp Pay seemed to be shortsighted. The view of the CCI that WhatsApp Pay was not in a position to create bias in the market was fallacious due to the simple fact that WhatsApp Messenger had been a top player in the market for years. CCI failed to consider that the bias would definitely change once the features of WhatsApp Pay were fully implemented in WhatsApp Messenger, as the consumer would be encouraged to use texting and payment service at a single location rather than installing separate applications for the same. This would elevate WhatsApp to a premium status and prevent users from switching to another app.

While the commission made specific mention of potential network effects and how they benefitted Google Pay in its order, it neglected to do so when it came to the participation of WhatsApp in the UPI payment’s industry. CCI had itself held in v. Google that new users have a tendency to choose a platform with an established user base and switch platforms less frequently due to a large network effect. The same reasoning applied to WhatsApp Pay due to WhatsApp's obvious position of dominance, which was neglected by the commission. Further, as per the interpretation of CCI, even a partial denial of market access amounts to abuse of the dominant position under Section 4(2)(c) of the Competition Act, if it takes away the freedom to substitute.


“Status quo bias” in Google Pay Case

To determine the dominant position of G-Pay, CCI referred to the principle of status quo. The European Commission had found this principle in the Google-Android case and held that due to the "status-quo bias effect," Google's strategy of pre-installing specific applications encouraged the consumer to stick with those applications rather than switching to others, even those with higher potential and that this practice had a detrimental effect on the market's ability to support healthy competition. However, this conclusion was supported by a substantial body of evidence regarding consumer behavior in the European market.

On the other hand, CCI did so without any convincing justification when it came to the Indian market. The Commission considered that, with a market share in the range of 90% to 98% for different EU Member States, Google's search application enjoyed an almost complete dominant position in the general internet search services market. However, as per NPCI data, Google Pay has a 35% market share, with its rival PhonePe enjoying a 44% share in terms of volume of transactions. Competitors like PayTM and BharatPe have also been growing in the market constantly. Further, CCI failed to consider that pre-installation and status-quo are not the only factors that drive the digital payment market in India. Other factors that Indian consumers take into account before making an informed choice include the application's accessibility at nearby retailers, UPI system’s higher level of incentives or success rates for transactions, and the viability and efficiency of banks while handling the transaction.


Google’s Revenue Sharing Agreement

Informant alleged that Google had forced device manufacturers to set up G-Pay as default payment but it was clarified by Google that it had merely signed Revenue Sharing Agreements (hereinafter referred as “RSAs”) with the manufacturers. As per these agreements, Google distributed part of its revenue to device manufacturers in return for pre-installation of Google’s applications in their devices. RSAs of Google did not force manufacturers to pre install its applications but merely gave them the additional incentives. CCI concluded that manufacturers preferred Google applications in their devices due to the agreement and it led to the benefit of Google because consumers could not shift to competing payment apps because of their habitual preference for defaulting applications. As per CCI, in the “market for apps allowing payments using UPI," such contractual ties with Smartphone manufacturers could interfere with the level of playing field and lead to dominance.

The European Commission in the Android Case had found Google’s RSAs anti-competitive when Google had reduced incentives for those device manufacturers, who had pre-installed the competing search engines in their devices. It was determined that due to Google Search's unsurpassed dominance, other competing search engines could not have matched Google's revenue-sharing payments and Google's advantageous position itself perpetuated the RSAs' distorting effects. However, in its prima facie order, the CCI failed to establish the dominant position of GPay in the UPI sector. In addition, it failed to clarify the extent to which Google's monopoly of the market for mobile operating systems and applications stores has allowed it to exclude competitors like PayTM and PhonePe from providing similar incentives to the device manufacturers to preinstall their applications.



The digital payment market in India continues to evolve with new technologies, marketing techniques, and further innovation affecting the sector. Considering the continuous growth in the UPI Payments, NPCI released a circular in November 2020 to put a 30% cap on the volume of payments for each TPAP. Currently, this deadline has been extended to December 31, 2024. The objective of the step is to keep top players in check but it is nowhere a solution to the competition concerns that may arise even after the implementation of the scheme.

While dealing with complaints of anticompetitive behavior in the digital markets, the Commission should exercise due caution by taking into account a larger picture. It is evident from the decisions of the Commission in both the cases that there are many problems and a lack of knowledge about the digital market regarding the anticompetitive behavior of the undertakings. In the cases above, the position of the CCI is different with respect to the pre-installation of an application. Given the number of users, WhatsApp has more active users than Google Pay. The inclusion of a payment feature in an already existing application could drive its competitors out of the market or deny them access to the market leading to an appreciable effect on the competition. The CCI acknowledged Google's abuse of its dominant position in the market, but rejected it in a similar situation concerning WhatsApp.

It is therefore, necessary for the Commission to make its position clear on the UPI market or otherwise any obscurity may lead to uneven and inconsistent practices even within the same market which may result in significant negative effects.

*Harshita Dixit fourth year student at Rajiv Gandhi National University of Law,Punjab at the time of publication of this blog.

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