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Explained | Why Indian tech entrepreneurs are unhappy with Google

Indian entrepreneurs say Google is abusing its monopolistic power to arm-twist them with Play Store fee, which they find exorbitant even after the tech giant promised to halve it. They say an Indian app ecosystem is needed to break the monopoly, but this requires government intervention and support.

March 17, 2021 / 07:10 PM IST
File image: A man using a mobile phone walks past Google offices in New York, US. Australia’s laws forcing Google and Facebook to pay for news are ready to take effect, though the laws' architect said it will take time for the digital giants to strike media deals. (Image: AP Photo/Mark Lennihan, File)

File image: A man using a mobile phone walks past Google offices in New York, US. Australia’s laws forcing Google and Facebook to pay for news are ready to take effect, though the laws' architect said it will take time for the digital giants to strike media deals. (Image: AP Photo/Mark Lennihan, File)

Google's move to halve its Play Store fee to 15 percent has failed to cut ice with entrepreneurs in India, who say the levy is still steep and amounts to misuse of its monopoly.

Google had announced on March 16, 2021, that it was reducing its service fee effective July 1, 2021, from 30 percent to 15 percent, for the first $1 million of the annual revenue of each developer. Any money made above that would be charged at 30 percent.

According to entrepreneurs Moneycontrol spoke to, while halving the play store commission is welcome, the cut that developers have to pay is still huge.

“This is atrocious,” Murugavel Janakiraman, founder, Matrimony.com told Moneycontrol. He added that it is dangerous for a platform to have so much power and is an abuse of dominance, especially when the dependence is high on the Android ecosystem. Over 95 percent of smart devices in India run on Android.

“Why can’t its users decide what platform they want to use for paying,” he asked, referring to Google's insistence on integration with Play's billing system.

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Not the first time

In September 2020, Google mandated integration with the Google Play Store billing system and a commission of 30 percent for in-app purchases of digital goods.

The search giant has categorised digital goods that can be purchased in-app. This includes items like virtual currencies, gaming characters and avatars, subscription services such as dating apps, music content and functionality like app-free content or premium features.

This earned a huge backlash from the Indian tech ecosystem. Indian startup entrepreneurs including Paytm founder Vijay Shekar Sharma made representations to the government to intervene. In fact, reacting to Google's latest announcement, Sharma tweeted, "When we are forced to use a payment system that charges 15-30 percent per payment, it can't be acceptable by anyone. The Digital India dream must not be ransom to such monopolies."

India’s competition watchdog Competition Commission of India launched an investigation into Google’s Play store dominance and its promotion of Google Pay on November 9, 2020.

Many questions

Sameer Samat, VP, Product Management, said in a blog, while making the latest announcement “With this change, 99% of developers globally that sell digital goods and services with Play will see a 50% reduction in fees. These are funds that can help developers scale up at a critical phase of their growth by hiring more engineers, adding to their marketing staff, increasing server capacity.”

However entrepreneurs are questioning why they need to pay this when they are already spending a large chunk of advertising dollars on Google.

Currently, Indian firms do not have to pay for the in-app purchases of digital goods their users make on the platform. This is because the integration with Google Play Store billing is not mandatory.

But companies will have to comply with this by March 2022 if they want to continue to sell through the play store. Google Play Store, which comes pre-loaded in the Android phones, enjoys a significant market share in India.

For entrepreneurs in India, this translates to dependence on the play store to tap into the market. Bobby Garg, co-founder & CEO, Passion Gaming, which runs Rummy Passion, said that even at 15 percent the fee was very high.

He said further clarity was needed on what this means for real money games such as fantasy sports, and online casino games. Currently, RMG are not allowed on Google Play Store in India whereas it is allowed in certain countries like the US, UK, Japan, Brazil, Colombia, Canada, and European countries such as Germany, France and Belgium.

While it might not be applicable in India yet, Garg says, it is not clear if the deposits users make are also charged with the commission. “Not all transactions made on the app is revenue for the firm,” he added.

But…

With Atmanirbhar gaining momentum, there is a huge support right now for the Indian app ecosystem. Rohan Verma, CEO, MapmyIndia, said, “An Indian play store would be incredible and will give choice to consumers.”

Efforts were made in this area already. Last year October, Paytm launched its Paytm Mini app store. Launched in March 2020, PhonePe’s Switch has over 100 partner apps on the platform for grocery, shopping, and also travel apps. IndusOS, an Indian app and content delivery platform on Android, launched in 2015 and works with OEMs like Samsung.

Though these initiatives are in the right direction, they may not be adequate to take on the might of Big Tech.

Janakiraman explained that while having an India app ecosystem is what is needed, companies cannot do it alone. “We need intervention from the government and their support,” he said.

This was, at least in part, the idea behind the Atmanibhar Digital India Foundation, which was formed in January 2021 to counter the dominance of big tech like Google, Facebook and Amazon to advise the regulators on legal and policy framework.

However, it is yet to be seen if this would help boost the ecosystem and take on the tech giants.
Swathi Moorthy
first published: Mar 17, 2021 07:10 pm

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