Google can't force app developers selling e-services to use Play billing system: Startups

Many Indian startups have raised concerns around Google's Play billing system, saying the tech giant cannot force Indian app developers/owners to sell digital services by compulsorily using its billing system.

Many founders were also of the view that India needs a local app store to provide more choice to consumers.

On Tuesday, Google said apps that choose to sell digital content through its Play Store have to use Google Play billing system and pay a percentage of the in-app purchase as a fee.

This would mean that any app that offers in-app purchase of digital goods like unlocking additional features or buying tokens to power up a game character or paying for songs, will be required to use Google Play's billing system.

Google charges a 30 per cent cut of the payment made within the app. However, cases like payment for physical goods (like ride-hailing services), bill payments and content subscription via the developer's own website will not require Play billing system.

In a statement, industry body IAMAI said the Indian Founders' community is concerned after the announcement.

"The primary likely reason is the perceived dominance of Google Billing System. As a payment aggregator, currently unlicensed but soon to be licensed in India, Google Billing System can choose which payment instruments it would work with and which ones it would not. The new draft RBI guidelines on payment aggregators, too, allows for that freedom," it said.

The compounding factor for many founders is the current revenue sharing policy of the Play store, Internet and Mobile Association of India (IAMAI) added.

"Just because Google owns the gate and the gateway to the digital ecosystem of this country, they should not act arbitrarily and enforce their rules and regulations which are contrary to our country's laws.

"Also, they cannot force Indian Apps developers/owners selling digital services to compulsorily use the Google Billing and payment system and charge 30 per cent MDR," Vishwas Patel, Founder, CCAvenues and Chairman of Payments Council Of India, said.

Google should not reject Indian apps who are using RBI-recognised payment aggregators and payment gateways, he added.

"Google's stand in courts is that it does not need RBI authorisation as it is not a payment system operator and here it is mandating that Indian Apps use only Google's proprietary Billing and Payment systems. Google should not exercise its dominant position, rather allow a level playing field for everyone in the ecosystem," Patel said.

For many founders of Indian startups, this brings back fears of the not so old, deeply problematic revenue share model between VAS service providers (mainly digital goods) and telecom operators, IAMAI said.

"Telcos took up to 70 per cent revenue share from VAS companies on the pretext of discovery, marketing, collection. In India, 98 per cent of people use mobile internet, more than 90 per cent of people use Android phones which gives Google control over many layers between customers and their service providers," it added.

IAMAI said it will call a meeting with its founder members to understand their concerns and to resolve them.

In response to IAMAI's statement, Google - also a member of the industry body - said the company has always been deeply vested in facilitating startup ecosystem growth with numerous outreach programmes that offer mentorship and guidance to a wide spectrum of developers.

Stating that it remains committed to supporting Indian developers to succeed globally, Google said consumer spend on apps and games created by Indian developers has doubled year to date, when compared to the same period last year. Also, Indian developers saw growth of more than 80 per cent in consumer spend from users outside of India year to date, when compared to the same period last year.

"Choice is central to Android -- the Google Play billing policy only applies to developers that implement in-app purchases of digital goods. Developers are welcome to implement digital purchases outside of Google Play Billing and continue to reach global audiences through Play Store, without any service fee," Google said.

Arvind Gupta, Founder Member of iSPiRT, had tweeted, "30% GateKeeping fees. Startups and consumers have very little choice. #DigitalMonopolies."

Razorpay CEO and co-founder Harshil Mathur tweeted that India needs a local app store. "India needs a local app store long term else 30% tax will eat up most businesses, is anyone trying to build one?" he said.

Developers can also distribute their apps via third-party app stores like Galaxy Store (Samsung) and Indus App Bazaar, where they will not have to use Play billing system.

"Like gaming maybe dating and education apps may soon get off app stores and get users to 'side load' in hopes to save costs," Cred founder Kunal Shah tweeted.

Earlier on Tuesday, Google said its policy around the Play billing system existed previously and that it was clarifying these further.

On September 18, the Paytm app was blocked from Play store for a few hours for violating Google's policy on sports betting activities. The app was restored after the Softbank-backed Paytm removed the 'cashback' feature linked to a game on the app.

Paytm - in its blog - had alleged that it was "arm-twisted" by the search engine major to comply with its biased Play Store policies "that are meant to artificially create Google's market dominance".