Google vs startups: It’s not about creating Indian app store, but a non-monopolistic one, say founders

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Updated: Oct 01, 2020 9:34 PM

While technically one could say that Google's stand is right and "there is nothing wrong in having a near 100 per cent market share but then there are anti-monopoly laws to work in favour of society and not for what's technically right."

In-app buying is referred to the purchase of goods and services within the app that helps developers offer apps free to users to a significant extent.

Work on setting up a national body representing the interests of internet companies in India may get underway in the coming time to amplify their stand against the app store policies of Google and Apple. The need to have a common body for internet companies in India was among the discussions that happened over a Zoom meeting involving around 100 leaders of the startup ecosystem on Tuesday. “There is a WhatsApp group created recently that has founders of most of the internet businesses in India like Paytm, GOQII, Sharechat, MakeMyTrip, Innov8, Ixigo, Toppr etc. The key pointer in the meeting was the need for a common body representing the internet companies of India that can lobby against monopolistic moves by these giants,” said one of the founders, attending the meeting, Financial Express Online spoke with.

The other major take away from the meeting was to work towards having an alternate play store, not necessarily an Indian one, to loosen the massive control the two companies, largely Google, have on the distribution of apps through their respective app stores viz, Google Play Store and Apple App Store. “It is not Indian versus vs foreign app store. It is about having a non-monopolistic app store. Tomorrow the new app store would charge let’s say 20 per cent commission on in-app purchases and then another one will charge suppose 15 per cent and so on, this what and how true competition should work,” another founder told Financial Express Online.

Google and Apple didn’t immediately respond to a request for comment.

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The founders are looking to approach the government to discuss the matter, however, that would take time. “There is no point in approaching the government or others unless there is a body to represent. They would also not want to go completely against such companies and appear hostile at a time when the country is looking to boost foreign investments. So, it has to be a thought-through plan. It might also be possible that after some time, things go back to where it was and we all start paying 30 per cent commission,” said one founder.

The backlash by Indian startups has been in response to Google enforcing app developers distributing Android software on the Play Store to use its Google Play billing system instead of other payment systems and collecting 30 per cent from the in-app purchase as a fee. “30 per cent billing by Google Play would mean, let’s say out of Rs 100, Rs 30 will go to Google, Rs 18 to the government govt, how would companies earn in such a scenario,” a founder at a leading Delhi NCR-based startup told Financial Express Online.

Google had recently temporarily removed Paytm from its app store for failing to comply with gambling policies that eventually led to the current furore even as Paytm had hit back at Google calling the app ban an arm twisting exercise. After Paytm, Google on Wednesday had turned the spotlight on Zomato and Swiggy by sending notices for their alleged in-app gamification features violating Play Store guidelines. While Zomato was running the Zomato Premier League for users to make match predictions and win rewards, Swiggy also had Match Day Mania offers to tap into the IPL season.

In-app buying is referred to the purchase of goods and services within the app that helps developers offer apps free to users to a significant extent. Developers offer upgrades to a premium version of the app, or unlocking paid features, access to premium offers before others, ad-free use of apps, etc., through such purchases.

“The bigger issue is that we need to create an alternative distribution ecosystem. The China model is to create your own ecosystem and so that you are not dependent on someone else’s ecosystem. India doesn’t have to block everyone but create a competing player for fair play and to avoid one player dictating rules of the game,” one of the founders of a travel company told Financial Express Online.

Also read: Despite fall in pending MSME dues by ministries, CPSUs; these buyers are holding back majority payment

The mandate for 30% per cent commission, however, has been in existence from quite a few years but finally enforced now. “We’ve always required developers who distribute their apps on Play to use Google Play’s billing system if they offer in-app purchases of digital goods, and pay a service fee from a percentage of the purchase,” said Sameer Samat, Vice President, Product Management in a Google’s Android Developers blog on September 28. “…we have clarified the language in our Payments Policy to be more explicit that all developers selling digital goods in their apps are required to use Google Play’s billing system,” he added. Importantly, majority of the app developers on Play Store selling digital goods have been using its billing system. “Less than 3% of developers with apps on Play sold digital goods over the last 12 months, and of this 3%, the vast majority (nearly 97%) already use Google Play’s billing,” Samat said in the blog.

While technically one could not say that Google’s stand is wrong given it is their resources and rules to govern them, but morally one may question the move. “There is nothing wrong in having a near 100 per cent market share but then there are anti-monopoly laws to work in favour of society and not for what’s technically right,” said one of the founders above.

The resistance by Indian founders mirrored the retaliation by leading tech companies in the US including Spotify, Epic Games, Tinder’s parent Match Group and more against Google and Apple. The group of companies have forged a nonprofit alliance called Coalition for App Fairness to fight the 30 per cent fee that affects their competitiveness in the market. The alliance in its website claimed that no other transaction fee, in any industry, comes close to the 30 per cent fee. “Apple charges 500 per cent more than the upper limit of 5 per cent charged by other payment providers for purchases…All in all, Apple makes $15,000,000,000+ (over $15 billion) in revenue annually directly from its app tax.”

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