January 24, 2025
JAKARTA – The competition watchdog has fined Google Rp 202.5 billion (US$12.4 million) for engaging in monopolistic and unfair business practices related to its payment system services on Google Play Store, its software distribution platform.
The three-member panel of the Business Competition Supervisory Commission (KPPU) ruled on Tuesday that the United States tech giant’s mandatory use of Google Play Billing for in-app purchases violated the country’s competition law, restricting market and technological development in the country, according to a KPPU statement.
Google Play Billing is required for developers offering in-app purchases in digital products and services distributed in the Google Play Store, according to the tech giant’s website.
The antitrust agency ordered Google to immediately cease enforcing the mandatory use of its Google Play Billing and to allow developers to participate in user choice billing (UCB) with a service fee reduction of at least 5 percent for a year after the ruling becomes legally binding.
UCB allows developers to offer an alternative billing option next to Google Play’s billing system.
“The mandatory use of the Google Play Billing system has eliminated alternative payment processing options that developers and consumers previously had access to,” panel member Eugenia Mardanugraha said during the hearing.
The billing system had reduced developers’ earnings as they led to a reduction in users, user losses, high migration costs and difficulties transferring user data, among other issues, she said.
The KPPU launched an investigation into Alphabet Inc.’s Google in 2022 and concluded in December 2024 that the tech giant had forced local developers to adopt the tech giant’s billing system at higher rates than other payment systems, or face removal of their apps from the Play Store.
Google controls 93 percent of app distribution platform market share in Indonesia, a country of 280 million with a fast-growing digital economy, the agency said.
This dominance, coupled with the fact that most users including developers were predominantly on Android, faced significant barriers to switching platforms, leading to the conclusion that Google had broken Indonesia’s competition rules.
The agency also found that Google had charged local app developers a fee of up to 30 percent via Google Play Billing.
A Google spokesperson said on Wednesday the company would appeal the ruling.
“We strongly disagree with the KPPU’s decision and will appeal. Our current practices foster a healthy, competitive Indonesian app ecosystem,” the tech giant’s spokesperson told The Jakarta Post on Wednesday, adding it was committed to complying with Indonesian law.
Google previously said it had introduced a system where developers could offer users an alternative billing option.
Businesses have 14 days to appeal if they object to a KPPU ruling, as stipulated in Law No. 11/2020.
Apart from Indonesia, Google is facing scrutiny from competition bodies worldwide for allegedly monopolizing the digital market.
The European Union has fined Google over $8 billion in the past decade for anti-competitive practices, including favoring its own services in search results and the Android operating system, as well as limiting competition in online advertising.
The tech giant also faced a $114 million fine from India’s antitrust agency in 2022 for abusing its dominant position in its Play Store policy. Google has appealed against the ruling and the process is ongoing.
In 2023, South Korea’s antitrust regulator fined Google $32 million for using its market dominance to squeeze out a local rival. The agency accused Google of offering incentives to developers to avoid launching apps on One Store, Korea’s local app marketplace.
The United Kingdom on Thursday launched investigations to assess the competitiveness of technology used by Apple and Google in mobile devices.
Japan’s parliament last year enacted a law to promote competition in smartphone app stores by requiring both Apple and Google to allow third-party app stores and payment systems on their mobile platforms.
Indonesian Game Association (AGI) chairman Shafiq Husein told the Post on Wednesday that the ruling could shake up the broader digital ecosystem, potentially affecting innovation, investment and the sustainable growth of the country’s digital economy.
“As developers, we’re not sure what the exact impact will be yet. But there might be external effects,” Shafiq said.
Read also: Google faces Indonesian antitrust probe, at risk of $1.67 m fine
Nailul Huda, digital economy director at the Center for Economic and Law Studies (Celios) said on Wednesday that if the ruling was upheld, it could slightly complicate payment processes for users already familiar with existing system, but it would also foster greater competition and improve options for developers and consumers alike.
Android-based phone manufacturers like Xiaomi, Oppo and Samsung have their own app stores alongside the Google Play Store, he pointed out, despite these alternatives being far smaller in scale.
He added that the KPPU would face challenges in upholding its ruling during the appeal process as this traditionally requires physical evidence rather than projected economic calculations.
“The Indonesian judiciary is perhaps not fully aware of competition issues like this. The KPPU must present clear evidence, such as losses or harm caused by Google’s market dominance,” he said.