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For start-ups, Google Play Store’s imposition of billing system is the real issue

Yatti Soni Bengaluru | Updated on October 22, 2021

Arbitrary selection of apps that will have to pay lesser service fee also questioned

Even though Google Play has reduced its service fee for certain app categories, tech start-ups say that the point of contention is the mandatory imposition of Google Play’s native billing system and not the high service fee.

In an official blog released yesterday, Sameer Samat, Vice-President, Product Management, said: “To help support the specific needs of developers offering subscriptions, starting from January 1 we are decreasing the service fee for all subscriptions on Google Play from 30 per cent to 15 per cent from day one.” He added that Google is also making changes to the service fee in the Media Experience program “to better accommodate differences in these categories”.

E-books and on-demand music streaming services, where content costs account for the majority of sales, have been made eligible for a service fee of 10 per cent.

“The real issue is Lagaan practices – the highhanded, unilateral and arbitrary enforcement of rules in the name of PlayStore policies. While Google has attempted to address one aspect of the unfairness – high prices (albeit in a half-hearted manner) – the more important aspects related to anti-competitive practices of restricting other payment providers to operate in their app economy and allowing a choice of payment provider to developers remain unaddressed and unresolved still,” Sijo Kuruvilla George, Executive Director, ADIF told BusinessLine.

Policy draws fire

Further, start-ups and app developers have also questioned the arbitrary selection of app categories that will have to pay a lesser service fee.

“This move shows that Google can work with lower commissions. We witnessed Apple doing the same in Japan, but what is the end game here. We need to ask how these tech giants decide on exempted categories that remain as opaque as their platform policies,” said Rakesh Deshmukh, co-founder and CEO, Indus OS.

IndusOS owns Indus App Bazaar, which is an Indian alternative to Google Play Store and App store. Indus App Bazaar does not charge a commission from the apps distributed through its platform.

Gaurav, the founder of edtech start-up StudyIQ, said: “Indian start-ups are very dependent on Google Play Store, and it gives Google undue control over the future of Indian start-ups. Which is why I think Indian innovation is very important in this field.” StudyIQ earns a portion of its revenue through in-app purchases of video courses on its app. Currently, the company uses a third-party payment gateway to do these transactions, and will be impacted when Google’s updated payment policy comes into effect.

“Though it’s a nominal respite to the developers who already have their apps listed on the play store, the commission is still significantly high for a small reach on a crowded platform of Google Play Store. At the end of the day, content creators are the king, and should not pay at the cost of survival to any monopoly,” said Paavan Nanda, co-founder of gaming platform WinZO.

Supergaming is one of the companies that have been using Google billing services from the beginning. Being a gaming company, Supergaming does not benefit from the recent reduction in service fee announced by Google. Alternative billing

Commenting on whether the company would like to have a choice of using an alternative billing system than Google, Roby John, CEO & co-founder, SuperGaming, said: “At this point of time we do not see more reliable services that are as comprehensive and offer consumer protection which Google’s native billing system provides and, hence, are very pro Google in terms of supporting our Consumers who already pay via Google Play. We don’t have any plans to support third party billing services other than Google’s native billing system.”

IndiaTech.Org said that even without charging commissions on in-app sale of digital goods and services, app store marketplaces are making revenue on every other aspect and feature they are offering the onboarded developers.

Rameesh Kailasam, CEO, India Tech.Org, told BusinessLine: “Between Apple and Google app marketplaces alone, their revenue is close to $60 billion-plus. They take a cut on everything they offer to the app developers. They are making money on every download. Even for adding you on map and search feature, they make money. It is not that they are bereft of any revenue.

“Any component involved in this ecosystem is a revenue-generating one. Technically, that makes it strange that now they want to charge 30 per cent or 15 per cent on sales, which is huge, it means start-ups are literally giving up their margins. Also, the freedom to choose the payment gateway is going away. Google has not given any clarity on that yet. This is actually contrarian to how the RBI would want to democratise access to payment.”

(With inputs from Debangana Ghosh)

Published on October 22, 2021

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