India has tech smarts to build a rival app store, but platform monopoly will be hard to break

Days ahead of a likely antitrust lawsuit in the United States, Google is facing a huge backlash in its biggest single market by number of users — India. That was triggered by its takedown of Paytm’s app, apparently because a cashback programme violated Google Play Store policies on gambling.

India’s leading payments provider cried foul because it perceived Google’s action as a bid by a rival payment system, Google Pay, but pulled its cashback offer to get its app reinstated. Since then it has opened up a battle on many fronts, and holds out a direct threat of launching an app store to rival Google’s for Indian companies.

Paytm has rallied scores of companies, possibly hundreds, in a bid to establish a coalition. On October 5, it also announced the launch of a ‘Paytm Mini App Store’ — a repository of mobile links that act as surrogate apps — to enable zero-cost payments via Paytm, as opposed to a 30 percent cut sought by Google for in-app purchases of digital services.

Reports suggest Indian startups leveraging the Android platform to build businesses share Paytm’s outrage for varied reasons. Rhetoric led by Paytm founder Vijay Shekhar Sharma refer to Google as “big daddy” and raise calls to “stop this tsunami,” and craft “our digital destiny.” History “will not be kind to us” if “we together don’t do anything,” Sharma reportedly proclaimed.

Such rhetoric, thankfully, is tempered with reality. Paytm has acknowledged that a rival app store is a long-term choice, and immediate efforts should seek government support to tame monopolistic abuse.

It is a move whose time has surely come.

Google has had an unfettered stranglehold over India’s smartphone ecosystem for nearly a decade. Our antitrust mechanism lacks energy, as well as teeth. Compared to regulators in Europe, for example, we have done little to monitor or check potential and real abuse arising from the Internet giant’s dominance of devices — 99 percent of India’s smartphones run on Android — not to mention monopolies in search, advertising, shopping and likely much more.

The European Commission, on the other hand, In March 2019 imposed a penalty of Euro 1.49 billion on Google and set rules to allow competition. For example, it barred Google from forcing device manufacturers to pre-install Google search bar and its Chrome browser. It also set an auction that allows rivals to become the default search provider on Android and other devices.

Even on home turf in the United States, a battle finally looms over Google’s app store, after game-maker Epic filed separate lawsuits against it and Apple over the 30 percent cut of in-app purchases. Both Apple and Google have hardened their views since. Google, for example, has set a deadline of September 30, 2021, for apps such as Netflix and Spotify to comply with the commission for in-app purchases, or risk being thrown out of Google Play Store. Google relaxed its deadline for Indian apps to April 2022.

What Can Indian Companies Do?

India doubtless has the tech smarts to build a rival app store. However, building it is the easy part. Getting people to use it is much harder. China’s Huawei, which has been blacklisted by the US, is discovering how difficult it is for a device maker to survive without access to Google Play Store, not to mention Google’s own apps.

Modern technology has a stronger ‘platform effect’ than in the past, and has given rise to monopolistic or duopolistic positions. That is why it is harder to create, say, another Facebook or Twitter, or to break the Apple-Google duopoly in mobile ecosystems. Even a former giant such as Blackberry has fallen trying to sustain a third system, and a standing giant, Microsoft, has simply shut down its Windows Mobile platform.

Apple does not allow third-party apps to be installed unless one tampers with the operating system, a practice dubbed jailbreaking. Google freely allows third-party Android apps to be installed in its devices, likely because it recognises that few users have the skills or inclination to climb out of its walled garden to find apps of their choice. In fact, Google has even promised to make it easier for users to access third-party app stores in Android 12, the next iteration of the operating system due in 2021. More app stores or more mobile operating systems also make it harder and more expensive for companies to build and update apps.

In the circumstances, a rival app store might be a sub-optimal choice for most companies and a needless distraction from their core business. It could at best be a last resort. The wiser course would be to nudge the government into antitrust action and set fair rules, negotiate in-app commissions, and perhaps join a small coalition emerging in the West that is pushing for an independent app regulator, especially for apps that are seen as competitive to those from Google or Apple.

Bala Murali Krishna works for a New York-based startup. Views are personal.