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Google Play’s 30% commission awakens Indian entrepreneurs to a long-awaited battle

Written by Moulishree Srivastava, Avanish Tiwary Published on     6 mins read

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Google has postponed implementation of 30% commission to April 2022.

Two weeks ago, when Google said all app developers will have to use its billing system for in-app purchases and pay a commission of 30% on each such transaction, it didn’t know it had shot itself in the foot.

Shortly after Google made this announcement on September 28 through a blog post and said it would start charging the commission from September 2021, the Indian startup ecosystem saw unity and bonhomie never seen before. A day later, Paytm founder Vijay Shekhar Sharma hosted a Zoom call with over 50 Indian founders to figure out a way to take on the American giant.

During the call, Sharma reportedly called Google the “big daddy” that controls the “oxygen supply of (app) distribution” on Android phones. He urged the entrepreneurs on the call to join hands to “stop this tsunami.”

One common solution that came out of the discussion was to break Google’s monopoly over Android app distribution in India. Paytm, which was already miffed with Google for delisting two of its apps including its flagship digital payment app from the Play Store, quickly launched a mini-app store as an alternative for app developers.

Even though the mini-app store doesn’t allow users to download apps as Google Play Store does, it still saw spiked interest from app developers. Paytm said over 300 companies have already agreed to be on its platform.

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Read this: Google faces probe for misusing Android’s dominant position in Indian smart TV market

Founders who would be affected by Google’s hefty 30% tax, knew this was not enough to fight the tech giant. In the following days, the Zoom call Paytm initiated eventually turned into a coalition dubbed the Indian Startup Association which consists of over 100 startups with a shared goal to fight against Google.

“Google charging the 30% tax is equivalent to Britisher’s charging the salt tax because apps are becoming absolute necessities, and no one can live their life without apps today. And it’s high time that companies not only in India but world-over come together to fight such kind of dominating and anti-competitive business practices,” Vishal Gondal, founder and CEO of health tech company Goqii, told KrASIA.

This camaraderie among Indian startup founders made Google a bit jittery which on October 5th said it will postpone the enforcement of its billing system to April 2022.

“We are setting up listening sessions with leading Indian startups to understand their concerns more deeply. We will be setting up Policy Workshops to help clear any additional questions about our Play Store policies,” Purnima Kochikar, director of Business Development of Games & Applications at Google Play, said in a statement.

But the fight is far from over.

The rising angst against US tech giants

The official launch of the Indian Startup Association is expected to be next week. The entity will become the nodal body for taking the Indian startups’ complaints against the bigger tech giants like Google, Facebook, and Twitter to the government. The association is reportedly planning to reach out to the Coalition For App Fairness, a recently launched organization by 13 app publishers including Epic Games and Spotify to take on Apple and Google’s duopoly in the United States. The Indian Startup Association seeks to understand how to structure itself and form its goals and strategy.

Late last week, the group of 15 startup founders reportedly held a virtual meeting with the Competition Commission of India (CCI) to inform the regulator about Google’s anti-competitive policies in India and alleged misuse of market dominance in the country.

People in the industry say the matter is not limited to just Google arbitrarily charging a commission, but also about how it’s trying to go against the local laws and the spirit of fair competition.

“This is not the issue of just one company against Google. This is the issue of the entire startup ecosystem against the US tech giants,” said one of the founders, who is a part of the association.

The founder alleged that “none of these companies comply with local laws and consider their policy to supersede Indian law,” he said. “The Indian entities of these US tech companies say that they don’t have control over anything and that is why they should have no liabilities.”

“We believe the Information Technology Act of India, which governs a lot these things,  is completely misused by Google and all these companies,” he added.

Founders who spoke to KrASIA on the condition of anonymity believed that one of the reasons Google removed the Paytm app from the Play Store was because its payment app directly competes with the former.

“Paytm is a bank. The only authority that can decide to shut a bank is India’s Central Bank, RBI. But Google on its own, whatever they thought was the policy violation, decided to shut the Paytm app which has millions of bank account holders” said a founder who is part of the Indian Startup Association. He said this could have panicked some users who may have been looking to download the app, but couldn’t, and hence lost the access to their money.

Read this: China set to launch antitrust investigation into Google over Android system dominance, report says

Last month, Google removed Paytm and its gaming app Paytm First Games from the Play Store for allegedly violating its betting and gambling policy. According to Paytm, the company was running a cashback promotion on the heels of the ongoing cricket tournament Indian Premier League (IPL). It said the cashback promotion had nothing to do with gambling or betting.

This is not the first time Google has removed an app for violating its policies and Indian founders fear if the company is left unchallenged it would set a wrong precedent. Weeks after removing Paytm and First Games, Google sent notices to food delivery majors Swiggy and Zomato for running a discount offer based on the score of the cricket tournament.

“Google can shut any app they want, they can impose any payment fee to anybody. They can even throttle any app,” said the person quoted above. For instance, he said,  MapMyIndia—a direct competitor to Google Maps—has mentioned how their app has many restrictions on Google Play which puts it at a disadvantage against the latter.

“So far, we have all been fighting our own fights against Google. Now it is not a fight of the divided app ecosystem and we are all coming together, which is why the government and everyone else is taking cognizance of it,” he added.

The search for an alternative

The Indian government has so far been sympathetic to the founders and has asked them for ideas to resolve these issues.

“The bottom line is the government has asked us to tell our problem and suggestions on the solutions. And then they will discuss it,” said the above-quoted founder. “Our representation will go to the government, and the government will come back with its own policies around it.”

Meanwhile, these founders are working on a domestic app store.

“Between all our tech companies, we believe we have enough resources to build it. It is not rocket science, and there are enough technical resources,” he said. “Half the R&D of these big tech companies are anyway in India. So we don’t have a technology challenge.”

However, he said building an app store that will be on par with Google or Apple, will be a challenge, but considering what is at stake, they are up for meeting that challenge.

One of the ideas that are being explored is to use a method that the National Payments Corporation of India (NPCI), the government-backed consortium of banks, deployed to develop the payments infrastructure UPI (Unified Payments Interface).

“UPI is a very good model which has been adopted. And India has pioneered it. This is one of the ideas. We don’t want the power to move from Google to some other company,” the founder said. “Just like how there are so many ways to make payments or so many browsers to access the internet on your PC, we want to have a similar arrangement for app stores as well.”

From the launch of a mini-app store and the formation of a founders’ support group, to Google buckling under pressure to discuss 30% commission with Indian founders, a lot has happened in the last few weeks. But, this is just the beginning of a long-drawn war between a global internet giant and tech entrepreneurs in the world’s second-largest internet market.

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