The implications of CCI’s investigation into Google over real money gaming

“User acquisition and marketing costs constitute more than 60-70% of businesses’ expenditures. When the margins for these players increased significantly due to cheaper distribution from Google Play Store, the margins for non-DFS and rummy players did not improve proportionately. This policy has a far-reaching impact on disrupting the market and throwing many early stage ventures out of business. Innovation and creation thrives on fair market conditions, which is what we are fighting for as a business,” said Saumya Singh Rathore, Winzo’s co-founder.

Prima facie, the CCI said that prolonged pilot programmes and preferential policies distort competition, and a lack of transparency in policy enforcement raised red flags about Google’s conduct.

The allegations

In 2022, Google updated its policies under which it commenced a pilot programme to test hosting of two types of RMGs on its Play Store – Daily Fantasy Sports (DFS) and rummy in India for a period of one year. Winzo said that the decision to limit the pilot’s scope to only DFS and rummy apps and disallow all other RMGs, was “devoid of any reason” and “discriminatory and arbitrary”. It alleged that its competitor Dream11, “had gained additional user traction of about 1.7 crores within two months from the launch of the pilot programme”.

Winzo also alleged that in 2022, Google restricted its advertisements policy by only allowing DFS and Rummy app advertisers to host advertisements, and given the “unprecedented potential” to increase business by accessing users through Google advertisements, restricting its ads was an abuse of Google’s dominant position.

Winzo also claimed that after a user sideloaded its app (from its website), and proceeded to make an in-app payment through Google Pay, the application showed warning messages like: ‘This person might be flagged as risky. Check again or cancel this payment’ and ‘This is an unusually high amount. Check again before sending money’.

Google’s defence

Google told the CCI that since there was no “objective” definition of games of skill in India, with such determination dependent on the specific format, features, rules of the game, it requires a case-by-case consideration.

The company also said that the online gaming rules notified by the IT Ministry, which required setting up of self regulatory bodies to determine what was kosher to be allowed on online gaming intermediaries such as the Play Store, were hanging fire.

Google also complained of the “fragmented nature” of gaming legislations in India, where various state governments can have different laws.

Increasing scrutiny

The CCI’s investigation comes just days after it fined Meta, the parent company of WhatsApp, Rs 213.14 crore for “abusing” its dominant position in relation to the messaging platform’s controversial 2021 update to its privacy policy – showing the growing antitrust scrutiny on tech giants in India.

The Commission also issued cease-and-desist directions and directed Meta and WhatsApp to implement certain behavioural remedies within a defined timeline. As per the CCI’s order, WhatsApp will not be allowed to share user data collected on its platform with other Meta Companies for advertising purposes, for a period of five years.