Indian Ed-Tech vs. Google: High Court clears path for billing dispute

The Madras High Court has refused to dismiss a lawsuit filed by ed-tech company Testbook Edu Solutions Pvt. Ltd. against Google and its parent entities, asper reports. This decision clears the path for a full hearing on allegations that Google's app store billing practices are arbitrary, coercive, and legally unenforceable.

Justice Senthilkumar Ramamoorthy of the Madras High Court dismissed an application by Google India Pvt. Ltd. and Google India Digital Services Pvt. Ltd. that sought to throw out the civil suit at a preliminary stage. Google had argued that the lawsuit was barred by law, specifically citing the Competition Act, 2002, and the Payment and Settlement Systems Act, 2007.

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Testbook, which operates 736 educational apps through the Google Play Store, claims that Google unilaterally imposed a 15-30% service fee via its Play Billing System. The ed-tech company alleges that Google leveraged its "superior bargaining power" due to its dominant position in the Android ecosystem, where it holds an estimated 96% market share. Testbook also challenged clause 15.3 of Google's Developer Distribution Agreement, which it argues forces developers to either accept new terms or exit the Play Store.

While similar lawsuits filed by other developers have been previously dismissed and upheld by a division bench of the Madras High Court, the present bench found that Testbook's plaint introduced additional critical issues. These include specific allegations of tortious interference, economic duress, and, notably, a claim that Google waived its right to charge service fees due to a prolonged history of not doing so.

In its ruling, the court emphasized that while the Competition Commission of India (CCI) has jurisdiction over market-wide anti-competitive behavior, civil courts are not precluded from hearing contractual disputes between private parties. Justice Ramamoorthy stated that the ouster of a civil court's jurisdiction must be explicit and cannot be easily inferred.

The single-judge bench held, "In contrast to the in rem proceedings before the CCI, in the present suit, the plaintiff has only requested for relief in relation to the specific bilateral contract(s) between the parties to the suit. Such in personam disputes cannot be adjudicated by the CCI, which is statutorily empowered to examine whether an enterprise has abused its dominant position in the relevant market and not whether one party to a contract is in a dominant position vis-a-vis the counter party and whether, in that context, the relevant contract was entered into without the free consent of the aggrieved counter party or is otherwise in violation of public policy because it is unconscionable on account of the abuse of the unfair bargaining power. The above discussion leads to the conclusion that the present suit is not barred by Section 61 of the Competition Act."

This ruling marks a significant moment for app developers in India, offering a potential avenue for recourse against perceived unfair practices by dominant platform providers. The case is now set to proceed to a full hearing, where Testbook's allegations against Google's app store billing policies will be thoroughly examined.

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