Google has mandated all in-app purchases to be routed through Google Billing, startups say this is monopolistic behaviour from Google and the need has come to have our own Indian app store, but some say Google is justified in its demands, what does all this mean?
After sparking massive outrage among Indian startup founders and developers, Google has pushed its timeline for implementation of the Play Store billing policy to March 31, 2022, from 2021.
Industry sources pointed out that while the postponement might have provided more room for deliberations between startups and Google, it hasn't resolved the problem yet.
“What this has done is given scope for reconciliation between industry players and Google. Eventually, Google might give some leeway to apps to use their own arrangements with payment gateways but that is yet to be seen,” said a top startup executive on the condition of anonymity.
Sources also have indicated that large Indian tech companies have formed a group and have reached out to the government for intervention in this matter.
But what is the issue here anyway?
The issue revolves around Google extracting a hefty charge for its app store services and mandating all payments to be routed through Google billing. The objection that is being raised by founders is that Google being the dominant operating service provider in India, it is exploiting its situation by mandating something like this. Since Google claims it is an open system, it should encourage other payment services to work in this space too.
Okay, so is this exploitation of market position?
That's the big question. Is it exploitation of the market position at all or is it distribution fee charged by a platform? There is no clear answer yet. One school of thought believes that Google is offering a platform, where consumers are downloading apps because they trust Google. Now, if Google wants to charge apps for that, then it is within its rights to do so. After all, brands which open shops in a mall pay a charge to the mall owner as well.
The other school of thought believes that Google which showcases Android as an open system where any one can participate, at the end of the day is behaving like an Apple which also has extremely restrictive policies on in-app payments, publishing of apps and others.
Still a little confused? But what does Google billing cover anyway?
In simple terms, the mandate covers digitally sourced and digitally consumed products and services. This would include fitness subscriptions, in-app payments for games, online education and similar services. It does not cover physical goods sold on Amazon or Flipkart or other e-commerce products. Google says any paid apps on the Store will have to use Google Billing and any subsequent purchases within the app will also have to be processed through Google Billing.
So does this mean Netflix subscriptions, Gaana membership payments, everything will now be done through Google Pay?
Yes, if the transactions are done within the app. Now if the transactions are done on the home website or through any other third-party app store or platform, Google does not make any restrictions in that regard. But this also creates a friction in the experience. For instance, if the subscription needs renewal, then the customer will have to jump to the website, log in separately and make a transaction. The entire experience becomes broken.
So overall this move is bad for the ecosystem?
It's difficult to say whether it is bad or good. There are multiple anti-trust cases underway worldwide around app store policies and the role an app store plays in the overall app ecosystem of the world. Given so much is happening digitally in India these discussions are assuming centre-stage now.
Mandar Kagade, a fintech consultant, pointed out that what Google is asking for is a distribution fee, it is not a charge on payments. If any company does not want to pay the fees, they can easily migrate to other app stores or direct users to download the app from their own websites. Companies like Paytm and others can nudge the users to alternate distribution points where they would have integrated with their own PG of choice, he added.
But yes, the problem remains. Given that India is 95% an Android market, Google Play Store continues to be the platform of choice for consumers looking to download an app.
Got it! Then what is the entire thing around an ‘Atmanirbhar’ app store?
This is not directly related to the pricing issue, but is an extension of this debate. Indian startup founders have formed a group and they say that Google controls too many aspects of their business, from mandating payments to deciding gamification features. An American company has too much say on how the Indian startup ecosystem will function, they say. This group of startups led by Paytm, BharatMatrimony, Dream11 and few others are understood to have made a presentation to the Ministry of Electronics and Information Technology for the need for India to have its own app store and formulate its own rules.
Something similar happens in China, where there is no Google Play Store. There are multiple app stores each with their own publishing and payment rules. Even large phone manufacturers like Xiaomi have their own app stores.Industry experts feel involving the government in what should ideally be business decisions might not be the right thing to do. Afterall in a free market, businesses should be able to decide pricing and other concerns through dialogue.