Budding app startups react to Google Play Store's commission reduction

Most of the app developer companies welcome Google reducing the Play Store commission, but big players like Paytm don't buy the search engine's story.

For long Google and Apple who hold almost the entire share of the mobile OS ecosystem, have been facing backlash from app developers as they have to cough up 30% commission for every transaction on their applications. Many accused the tech giants of being monopolistic and predatory in nature.

The untimely Covid-19 pandemic-induced lockdown further increased the stress on firms particularly the small app developer startups. Taking note of the issue, both Apple and Google reduced the gatekeeper's fee from 30 per cent to 15 per cent.

However, this applies to the budding app developer firms that earn $1 million in annual revenue.

The reduced commission programme came into effect for Apple App Store from January 1, 2021 and for Google Play Store, it is slated to go live from July 1 later this year.

DH spoke to some of the emerging app-developer companies for reaction to the recent announcement by Google. Here they are.

Boltt Play - Music, Videos, Games, Social, Rewards app

Boltt Play app on Google Play Store (screen-shot)

"One of the most significant demands of the industry has been met by Google. The search giant is one of the two primary multi-billion dollar digital gatekeepers for apps. According to Google almost nearly 99% of developers would see their fees cut in almost half, and this makes it no less than a revolutionary step. The move will bolster the developer ecosystem across the world. While there has been some criticism around the move, we must look at the ambit of its benefit. As a matter of fact, this comes after a campaign over app-store fees, which had led to a lawsuit," said Arnav Kishore, co-founder of Fire-Boltt that makes Boltt Play music app.

Arnav Kishore,Co-Founder of Fire-Boltt

Appy Pie

App Builder to Create App on Google Play Store (screen-grab)

"Cutting the fee to 15% is a welcome move for small developers/ app owners. The development will motivate people to bring ideas to life at a lesser cost and will motivate first-time entrepreneurs to take the plunge. However, 30% fee post $1mn is a dampener as it will only cut the margins for developers who are making more money, considering the fact that 30% is a major amount," said Abhinav Girdhar, Founder, Appy Pie.

Abhinav Girdhar, Founder, Appy Pie

Chingari
"It is a good move and in favour of the developer who uses Google in-app payment module on their app. When it comes to Chingari, we don't use Google in-app payment service on our app. It won't affect us. In general, it benefits the developers," said Biswatma Nayak, Co-founder & Head of engineering.

Chingari app on Google Play Store (screen-shot)

However, not all app-makers are satisfied with Google's latest move. Paytm, one of India's top digital wallet app company, believes that the search engine's 30 per cent commission for big companies is still exorbitant. It eats away the major profits, leaving very little for the management of the firm. Also, Paytm accuses Google of arm-twisting the companies to use only the latter's payment system and not allow to use any other third-party or even Paytm's own payment interface.

"It is absolute hogwash on the big issue of how Google is taking the money from the Indian app industry altogether & this is an attempt to divert the attention. Digital-native companies have millions of dollars of revenues & they continue to pay 30 percent which is way exorbitant & are not allowed to use even our own payment platforms. It is shocking that Google has yet not solved the biggest issue that they control the destiny of this country's internet and technology industry & overall all industries which aim to use the internet & technology by allowing them to use their own payment platform & not force them to pay this tax," Paytm spokesperson said.

Paytm. Picture Credit: Reuters

"Google's tax of 30 percent is effectively all the margin any technology company in India can ever make & means that we would raise equity and pay Google those dollars back in their home. It does not grow India's digital ecosystem. It does not grow India's technology industry. It is clearly yet not addressing the basic fundamental issue that exists that Google blocks open market, usage of payment platform, usage of distribution opportunities. This is nothing but a gesture made to divert attention which we must know is still unaddressed. Google must allow other payment platforms to be used. It must allow the distribution of apps openly and without any hindrances where the law of land allows that service to exist,"Paytm spokesperson added.

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