UPDATE 2-India starts inquiry into Google app payments antitrust compliance

(Adds details from antitrust order)

By Aditya Kalra

NEW DELHI, May 12 (Reuters) - India's competition watchdog has begun an inquiry into Google after some companies alleged the service fee the U.S. firm charges for in-app payments breaches an earlier antitrust directive, a regulatory order seen by Reuters showed on Friday.

Tinder-owner Match Group and Indian startups have asked the watchdog to investigate Google's new User Choice Billing (UCB) system, which they alleged was anti-competitive.

The Competition Commission of India (CCI) on Friday issued an order stating "it is of the opinion that an inquiry needs to be made."

The order is not public and Google did not immediately respond to a request for comment.

In October, the CCI imposed a $113 million fine on Google and said it must allow the use of third-party billing and stop forcing developers to use its in-app payment system that charges commission of 15%-30%.

Google later began offering UCB to allow alternative payments alongside Google's when purchasing in-app digital content, but some companies complained the new system still imposes a high "service fee" of 11%-26%.

This, Match and the Alliance of Digital India Foundation argued, meant Google had not complied with the earlier antitrust directive that ordered it not to impose any such "unfair and disproportionate" conditions.

In its order, the watchdog asked Google to explain certain provisions related to the in-app payment system before and after UCB and provide details of policies related to sharing of user and app developer data.

Google needs to respond in four weeks, the order said.

Google has previously said the service fee supports investments in the Google Play app store and the Android mobile operating system, ensuring it distributes it for free, and covers developer tools and analytic services.

The company, which counts India as a major growth market, faces other regulatory challenges, including a setback that forced it to change how it markets its Android system. (Reporting by Aditya Kalra; Editing by Sharon Singleton and Mark Potter)