Google Faces $13.4 Million Fine for Antitrust Violations in Indonesia

JAKARTA, Investortrust.id – Google LLC has been fined by Indonesia's competition watchdog for abusing its dominant position in the app distribution market. The case stems from allegations of monopolistic practices and unfair competition.

The Indonesian Competition Commission (KPPU) imposed the penalty under provisions of Law No. 5 of 1999, citing violations related to market dominance and restrictive practices. The fine amounts to Rp 202.5 billion, equivalent to $13.4 million.

The decision was announced during a hearing on Case No. 03/KPPU-I/2024, led by Commissioner Hilman Pujana, who chaired the panel, accompanied by Commissioners Eugenia Mardanugraha and Mohammad Reza.

Hilman explained that Google LLC was found to have violated two key articles of the law. The first, Article 17, relates to practices that result in monopolistic behavior or unhealthy business competition. The second, Article 25 paragraph 1(b), pertains to dominant market positions that hinder consumer access to competitive goods or services in terms of price or quality.

However, Hilman clarified that Google LLC was not found guilty of violating other provisions, including Article 19 (a) and (b), and Article 25 paragraph 1(a).

“We declare the respondent not proven to have violated Article 25 paragraph 1(a) of Law No. 5 of 1999. However, we confirm that the respondent is legally and convincingly proven to have violated Article 25 paragraph 1(b),” said Hilman during the ruling at the KPPU headquarters in Central Jakarta on Tuesday, Jan 21, 2025.

Mandated Penalties and Corrective Actions

As part of the ruling, KPPU ordered Google LLC to cease requiring the use of its Google Play Billing (GPB) system on the Google Play Store. The company was also instructed to pay a fine of Rp 202.5 billion to the state treasury.

“The respondent is sentenced to pay a fine of two hundred two billion five hundred million rupiah, which must be deposited into the state treasury as income from competition law violation penalties,” Hilman added.

In addition, Google LLC is required to offer all developers the option to participate in a User Choice Billing (UCB) program, which includes a service fee reduction of at least 5% for one year from the date the ruling becomes final and binding.

The commission ordered Google to implement these measures within 30 days of the ruling’s legal finalization and submit proof of the fine payment to KPPU.

If Google files an appeal, it must deposit 20% of the fine amount as a bank guarantee within 14 days. A late payment penalty of 2% per month will apply if the company delays the payment of the fine.

Google LLC retains the right to challenge the KPPU’s ruling by filing an appeal with the commercial court within 14 days of receiving the decision notice. Failure to appeal within this timeframe would be considered an acceptance of the ruling.

Case Background

The investigation began after allegations that Google LLC monopolized the app distribution market through its mandatory GPB system for transactions on the Google Play Store. Developers were reportedly penalized, including having their apps removed from the store, if they did not comply with the GPB system.

The GPB system is a digital payment method for in-app purchases distributed via the Google Play Store in Indonesia, with service fees ranging between 15% and 30%. Applications required to use the system include games, digital content, cloud storage services, and productivity tools.

Notably, neither Google’s legal counsel nor its representatives attended the reading of the verdict.

Google to Appeal Indonesian Antitrust Ruling

Google has rejected the recent ruling by Indonesia's Business Competition Supervisory Commission (KPPU) and announced plans to file an appeal. The U.S.-based tech giant expressed its disagreement with the decision and reaffirmed its belief in the positive impact of its practices on Indonesia's app ecosystem.

"We disagree with KPPU's decision and will pursue an appeal. We believe that our current practices have a positive impact on the app ecosystem in Indonesia," Google stated in a press release received by Investortrust.id on Wednesday, Jan 22, 2025.