As Google comes closer to updating its play store payments policies, the Alliance of Digital India Foundation (ADIF), a digital startup policy think tank said an 11-26% service fee for in-app purchases will be a death knell for the Indian startup ecosystem.
The think tank has requested the Competition Commission of India to look into these abusive dominance practices of Google on an urgent basis.
The statement from ADIF, which counts startups like TrulyMadly, Paytm, and MapmyIndia, assumes significance as Google will allow app developers to use an alternate billing system other than Google Play for in-app purchases within India from April 26. While Google is allowing developers to make the changes with respect to the guidelines from the CCI directions, it would still charge commission or service fee from the developers even if they use an alternate billing system.
Simply put, developers currently pay a service fee ranging 15-30% for using in-app purchases and subscriptions by their consumers on Google Play, whereas if the developers choose an alternate billing system from April 26 then they will have to pay 11-26% to Google.
According to ADIF, despite not using services from Google, the developers would have to pay a service fee to Google.
“This commission is not so different from the colonial ‘Lagaan’. It is unfair to app developers and to the millions of users who rely on digital applications for their day-to-day activities,” ADIF said in a statement.
“This would take away a huge chunk of the revenue made by Indian app developers and startups and would render business models of many young startups unviable, especially the one relying on in-app purchases, paid apps or subscriptions,” ADIF added.
Apart from the Rs 1,337 crore fine on the company for allegedly abusing its dominant position in the Android market, CCI has also imposed another Rs 937 crore for abusing its dominant position with regard to its Play Store policies.
“Unfortunately, there is no quorum at the CCI and hence Google is taking advantage of an institutional lacunae, bringing in UCB (User Choice Billing) in haste and in the process, hurting start-up story and also disregarding the CCI Order,” ADIF said.
In December, however, both Apple and Google told the parliamentary Standing Committee on Finance that the majority of the app developers do not pay a commission to them for using their respective app stores.
Google said that 97% of developers on its play store can distribute their apps and utilise the services at no cost.
Citing an example of OTT players, ADIF said the commission fee would take away almost one-third of the revenue of the OTT platforms. “This would lead to a few of the OTT platforms becoming unsustainable, else remaining platforms increasing the fee for consumers, hurting millions of OTT subscribers for no fault of theirs,” ADIF said.
