A case against Google ‘lagaan’

The age of technology and information has ushered in solutions to age-old problems, but it has also brought challenges that need urgent attention. India, a global leader in IT solutions with a pool of talent and innovation, may be on the verge of a technological dissemination as Google’s lagaan, an unwarranted, 15–30 per cent commission charge levied on in-app purchases and subscriptions, poses a new threat to the growth of India’s digital and national economies.

India’s digital payments infrastructure, gaining global significance in a brief period, has ensured a transparent, equitable, and easily accessible interface for seamless and secure transactions. Meanwhile, Google has leveraged its app marketplace to impose entry barriers for other digital payment service providers, inhibiting their critical freedom to collaborate and grow. A reduction of 4% by Google for developers choosing an alternate payment processor other than Google’s Payments Billing System (GPBS) via the User Choice Billing (UCB)
route still forces developers to pay an anti-competitive commission to Google, ranging from 11 per cent to 26 per cent.

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While app developers bear additional costs, such as commission fees to third-party payment processors, the larger outcome is an obstacle to profitability for tech startups. This entails a snowball effect, making affordability a major concern for millions of users.

In a response to the directives levied by the Competition Commission of India (CCI), charting eight corrective measures for the tech giant held responsible for clear violations of Section 4 of the Competition Act, Google has failed to address anti-steering clauses, and its justifications for service fees, and other charges are imprecise, non-specific, and at best, arbitrary.

The freedom of choice for users is limited to in-app purchases for using third-party payment processors, and not to app downloads, leading to a widening divide between users and developers. A slew of such limitations further obfuscates the free market dynamic, making way for questions over data-sharing between the company and associated developers.

Economic progress has emerged from the convergence of trade, technology, and innovation. The proliferation of tech startups in India is driven by its unhindered entrepreneurial zeal, delivering unicorns that are capable of providing global solutions. In the nascent stages of its evolution, transparency, equality, compliance, and cooperation are imperative in achieving sustainable and equitable growth. The Google Lagaan poses a serious issue for India’s growth story, a country that stands to gain immensely from its potential in technological innovation.

Micro, small, and medium enterprises leveraging subscription-based business models or generating revenue through in-app purchases, and constituting a large pool of India’s startup ecosystem, stand to bear expensive costs for leveraging app stores to reach users, making it tougher to do business in an increasingly competitive environment. The result: the surging expenses can lead to a direct increase in cost for users, making advanced, resourceful, and innovative digital applications inaccessible and unaffordable. Consumers pay more for an app, in-app purchases, and subscriptions because app developers and startups are obliged to pay huge commissions to Google.

The implications extend to platforms popularly used across millions of Indian households, such as OTT platforms, education-technology platforms, and various others. The dual monopoly exercised by tech giants such as Apple and Google has led to unfair extractive policies becoming evident, which can seriously harm India’s technology ecosystem.

Out of the approximately 800 million Indian internet and smartphone users, a large section stands to be left excluded from digital inclusion. Google’s exorbitant commissions pose a formidable barrier to India’s pursuit of economic prosperity and require a major and urgent call to action.

(The writer is director of Alliance of Digital India Foundation.)