Google Play Store commission cut does not address the issues of Indian startups: ADIF

Source: AP

US tech major Google’s move to slash the commission to 15 percent while welcome, has not addressed the larger issue of allowing other payment choices for the developer ecosystem, said the Alliance of Digital India Foundation (ADIF), a New Delhi thinktank consisting of entrepreneurs and startups.

According to ADIF, these changes are “an admission of guilt and unfairness on Google’s part in their PlayStore policies.”

Google app store fees cut

On October 21, Google announced that it is lowering its app store fees for all subscription-based services to 15 percent from the existing 30 percent starting January 1, 2022. This comes as the internet giant faces increased scrutiny over its app store practices in India and across the world.

Google said that ebooks and on-demand music streaming services, where "content costs account for the majority of sales", will be eligible for a further decrease in its service fee, which "can be as low as 10 percent".

Not enough

In a statement, the agency said, “The announcement might come as a source of happiness for the subset of developers who are already on the Google billing system. The cut will improve their margins – should they fall into the “right” categories that the company deemed fit for Google’s relaxation in margins.”

However the company has not addressed the larger issue of allowing other payment choices for developers. “The more important aspects related to anti-competitive practices – of restricting other payment providers to operate in their app economy and allowing a choice of payment provider to developers, remain unaddressed and unresolved still,” ADIF added.

“What developers are asking for is fairness and not benevolence in the form of “reduced” commission percentages. It has never been about the percentages. As long as Google gets to unilaterally dictate prices and people don’t have choices, it's still a Lagaan – be it 30, 15 or even 2, the percentages do not matter,” said ​​Sijo Kuruvilla George, Executive Director, ADIF, said in a statement.

The agency said that it wants the tech major to address the concerns of all developers and not just those already on the billing system. It also wants the status quo to remain, till the CCI probe is complete.

On October 11, Moneycontrol reported that The Alliance of Digital India Foundation (ADIF) - a New Delhi think tank consisting of entrepreneurs and startups - had moved CCI to seek interim relief against the implementation of Google Play Store commission till the investigation into the tech giant’s abuse of dominance is complete.

Backlash against Google's Play Store commission

While Google has always charged a 30 percent commission for apps selling digital goods on their app stores, the firm said in October last year that it will more proactively enforce this commission starting September 30, 2021. It had then noted that the change is expected to impact less than 3 percent of apps on Play Store that are currently not using the company's billing system.

However, following a massive push back from the Indian developer community, the tech giant delayed the implementation to March 2022. Google also announced the reduction of its commission rate to 15 percent for the first $1 million revenue developers earn using the Play billing system every year in March 2021, which came into effect in July 2021.

Google is currently facing a probe from India's antitrust body CCI

Apart from India, Google and Apple are facing scrutiny over business practices related to their respective app marketplaces in several countries including the United States.

In September, South Korea's parliament had approved a bill that bans app store operators like Google and Apple from forcing app developers to use their own billing systems for in-app purchases.