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Google puts Swiggy and Zomato on notice for running cashback promotions

Written by Avanish Tiwary Published on 

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Google faces backlash from Indian tech entrepreneurs for charging 30% commission on all in-app purchases.

Less than a fortnight after removing Indian digital payment company Paytm’s two apps from its app store for allegedly flouting gambling and betting rules, Google sent notices to food delivery majors Swiggy and Zomato for running cashback schemes through their platforms.

Both companies had ongoing cashback promotions on their apps related to the Indian Premiere League (IPL), a cricket tournament that is in season now. Zomato and Swiggy were giving their users cashback on orders based on successful predictions of match results.

After receiving the notices from Google, both food delivery companies have suspended their promotions.

“We are a small company and have already realigned our business strategy to comply with Google’s guidelines. We will be replacing Zomato Premier League with a more exciting program by this weekend,” a company spokesperson said.

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Read this: Google takes down Paytm from Play Store

In an earlier blog post, Deepinder Goyal, founder and CEO of Zomato, had said the company expects food delivery orders to shoot up during the cricket season. “With the ongoing IPL season and the subsequent festival season, we expect food delivery in both metros and smaller cities to make a full recovery soon—and resume growing over pre-COVID levels,” he said.

This comes at a time when Google faces backlash from Indian entrepreneurs for charging a hefty 30% commission from apps that distribute downloads through its Play Store. Founders say Google is misusing its monopoly in the Android app store market.

The development has given oxygen to the idea of developing a domestic app store to challenge Google’s chokehold—and bypass the company’s 30% commission. A Techcrunch report said a handful of Indian entrepreneurs such as Paytm founder Vijay Shekhar Sharma, MakemyTrip founder Deep Kalra, and top executives of Policybazaar have come together to explore this concept.

“You look at profitability in India, most of the startups are not making money. Even if they make money, a 30% payout to one ecosystem is a very large number. I do not think any startup in India has that level of operating margin,” Amit Gupta, co-founder and CEO at mobility startup Yulu, told KrASIA in a recent interview.

However, Google is trying to downplay this move by saying the change will only affect 3% of the apps that are distributed on the Play Store. “We only collect a service fee if the developer charges users to download their app or they sell in-app digital items, and we think that is fair,” the company said.

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