Why is India’s startup community up in arms against Google’s Play Store?

The tussle between startup founders who built these apps, and Google, which commands a bulk of app downloads in the country, has been ongoing for three years.
Last Updated 04 March 2024, 10:51 IST

Bengaluru: On Friday last week, Google pulled more than a dozen apps from its Play Store due to non-compliance by over 10 companies to its billing rules. The tussle between startup founders who built these apps, and Google, which commands a bulk of app downloads in the country, has been ongoing for three years. While the government has intervened to say Google’s actions cannot be permitted, the startup community has accused the tech giant of employing monopolistic practices. In this edition of DH Deciphers, Anjali Jain will explain the tussle that led to Friday’s delisting, the repercussions it could have for the Indian startup community and the way forward.

Why did Google remove some apps from its Playstore? 

In a blog post on March 1, Google informed that 10 companies, which it did not name, have not been paying a fee charged to developers who sell in-app digital goods. As per Google, these companies have been avoiding the fee for the past three years by way of court orders, even as they pay for similar services on other app stores. The tech giant charges a service fee of 15-30 per cent from developers for in-app purchases and subscriptions, depending on the type of app/service and the annual revenue it generates on Google Play. 

Apps removed from the store included several matrimony apps like Shaadi.com, Matrimony.com, Bharat Matrimony, and Christian Matrimony, along with Info Edge’s Naukri and 99acres, Alt Balaji’s Altt, and dating service QuackQuack, among many others, for offering their own payment gateways and not complying with Google’s billing policies. 

What is the legal battle the two sides have been fighting? 

Google has faced significant backlash from developers over the past few years after it announced in October 2020 that its Play billing system across the world will become mandatory, and compliance with these rules was expected within two years. However, on the behest of developers, the Competition Commission of India intervened to enforce an antitrust order that imposed a penalty on Google for abusing its dominant position and directed the company to allow third-party billing systems. Through this, developers would still be charged a service fee, albeit at a 4 per cent discount. 

In May last year, the firm said that developers can choose between Google Play's own billing system, an alternate billing system alongside Google Play's, or operating on a consumption-only basis (without any service fee) and has sought to apply this policy fairly across the ecosystem. However, some apps have since approached Madras High Court to obtain relief, but it refused to intervene. The Supreme Court last month issued a notice to Google India over the matter, and the matter is set for hearing on March 19. However, the court declined to provide startups with interim relief. 

What do app developers have to say? 

The Indian startup ecosystem has largely reacted negatively to the recent action, even as some apps have been reinstated on a consumption-only basis. Developers are claiming that removing in-app purchases will hurt long term revenues, while integrating multiple billing systems would rake up higher bills. Google has been accused of displaying monopolistic behaviour, with Shaadi.com founder Anupam Mittal even stating that it is a reincarnation of the British Raj, calling Google a new Digital East India Company. 

In light of these developments, calls for an India-focused app store have grown louder. Interestingly, PhonePe had last month launched Indus, an app store for Indian mobile apps that promises minimal service fee. However, the dominance of Android phones in India, many of which come with the Play Store pre-installed, ensures Google’s tight hold on the market. The affected companies are also being criticised for not factoring in the fee after more than three years of the announcement, and for expecting a free ride from the app store. 

What’s next in the app store battle? 

The government seems to be on the side of developers, with IT and Telecom Minister Ashwini Vaishnaw on March 2 asserting that the removal of apps can’t be permitted. He noted that the Indian startup ecosystem is a big part of the economy, and its fate cannot be decided by any big tech company. Guaranteeing protection to startups, the minister will convene a meeting this week with Google and affected startup founders to find a way forward. The matter is also up for hearing in the Supreme Court later this month. 

India is a huge and promising market for Google, making it a tricky situation for the tech giant. At the same time, it noted in its recent blogpost that most app developers in India are compliant with its billing policy, and bending the rules for a small cohort would be unfair. It also noted that less than 60 developers are charged a service fee above 15 per cent.

(Published 04 March 2024, 10:51 IST)

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