Google Play Billing Policy: Supreme Court Asks App Developers If They Can Opt Out Of Google's Payment System

The Supreme Court on Tuesday questioned app developers whether their contracts with Google allowed them to opt out of its payment system and engage other payment service providers.

The court was hearing app 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 developers have sought declarations that Google's Payment Terms of Service, Payment Policies and Developer Distribution Agreement are illegal and unenforceable. They have particularly challenged the definition of 'Authorised Provider' and Clause 15.3, alleging that these provisions impose restrictive payment terms and charges in violation of the Payment and Settlement Systems Act, 2007 and RBI guidelines.

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?”

Responding to the question, counsel submitted that developers could choose not to use Google Play Billing and instead engage alternative payment providers. He explained that before Google changed its policy, developers could independently enter into arrangements with payment providers such as Razorpay and Paytm.

"Well, still now, yes, I can. I can use not the Google Play Billing System. I can use others. But because of the change in authorised provider, they are not forcing me to use either theirs or one of them authorised by them,” counsel said.

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 the service fees charged to app developers. The CCI had found that the fees were neither unreasonable nor excessive, he argued.

Poovayya pointed out that the developers had initially approached civil courts alleging abuse of Google's dominant position, an issue falling within the CCI's jurisdiction. He argued that they were now attempting to recast the same dispute as a contractual one by raising allegations of unfair terms and violations of the Payment and Settlement Systems Act, 2007.

He further submitted that the CCI had exercised its powers under Section 27 of the Competition Act and examined the relevant aspects of Google's billing policies. The developers could not circumvent the CCI's findings by presenting substantially similar grievances as contractual disputes, he argued.

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.

Resuming his submissions, counsel for the app developers argued that the Madras High Court had erred in holding that their civil suits were barred by the Payment and Settlement Systems Act, 2007.

He submitted that Section 24 of the Act does not expressly bar the jurisdiction of civil courts but provides a mechanism for resolving disputes between system participants. App developers, he argued, 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.

He further argued that the developers had raised independent contractual and civil law claims involving novation, tortious interference with contractual relationships, undue influence, restraint of trade and the enforceability of contractual terms under the Indian Contract Act.

According to the developers, Google's policies restricted their freedom to choose payment processors by requiring them to use providers authorised by Google.

"As an app developer, I could contract any payment processor," counsel argued.

Counsel then drew the Bench's attention to the definition of "Authorised Provider", which was introduced into Google's contractual terms on October 3, 2022.

The provision defines an authorised provider as a third party, other than Google, authorised by Google to provide services enabling developers to receive payments for products sold to users through Google Play.

After hearing the parties, the Court posted the matter for further hearing on December 1.