Indian tech startups to seek govt intervention on Google Play commissions

Several internet startups that are protesting the imposition of commission on in-app purchases of digital goods on the app stores of global giants Google and Apple, will seek the intervention of the Indian government to resolve the issue.

Google on Tuesday said that it will reduce the commission from developers to 15% from 30% on the first $1 million they earn as revenue each year. Rival Apple had reduced commission to developers for in-purchases to 15% on the first $ 1 million revenue, earlier in January.

Technology entrepreneurs stated that this move by the internet majors will devastate the Indian technology ecosystem and consumers. More so as these companies mandate the use of their play store billing for in-app purchases and do not allow the use of other merchant payment systems that charge a significantly lower commission, industry executives said.

Murugavel Janakiraman, founder and CEO of Bharat Matrimony said, “These (big tech) companies are becoming dangerous for governments, companies, and consumers. It is important that the government take a serious view of Google and Apple”.

“Put together these two companies are turning into super governments of the world because the internet is flowing through ecosystems of both companies,” he added.

While developers in India have time till the end of March 2022 to integrate Google Play Store billing into their Android apps, it is effective from July in other parts of the world. Billings over $ 1 million will be charged 30% commission, the company announced.

Last October, Google had to delay the implementation of a 30% commission on in-app purchases in India after sustained resentment by local technology startups led by Paytm founder Vijay Shekhar Sharma who accused the internet giant of misusing its monopoly in the country.

Indian startups have also unified as Aatmanirbhar Digital India Foundation (ADIF), demanding an equal playing field for local startups against the big technology firms.

Referring to global precedent, Ajay Data, founder of Data Xgen Technologies, a homegrown email solution, who is also the secretary-general of AIDF, said the grouping has also petitioned both technology companies—Google and Apple– on this issue.

In the US, legislators have stepped in to ensure internet platforms offer other payment options, he said. In early March, the House of Representatives of the Arizona State passed legislation that holds back app store operators from forcing a developer based in the state to use an exclusive payment system. However, it is yet to be approved as a bill.

“This is exactly what we are asking for (in India). This is the way to go. Ensures markets stay fair, competitive & innovative,” said Data, citing the Arizona legislation.

Pointing out that while Google and Apple are private companies and can charge whatever commission they want, they should not also be allowed to “ stop other payment mechanisms where the commission is one-tenth or lesser,” Data said. “If I sell on my website I pay 1-1.5% commission (to a credit card company) and 15-30% for the same service on the app, it is extortion” he added.

Snehil Khanol, CEO & Co-founder of TrulyMadly said, “ even if the commission is reduced to 15% for everybody, it is still very high.”

Startups also worry about the dominant market position occupied by Google across various products.

Rohan Verma, CEO of MapMyIndia, said “Google has a monopoly in search, and is perpetuating it on Android, play store, on Google pay and Maps. These are monopolies and create an anti-competitive scenario,” said Verma.

While Bharat Matrimony’s Janakiraman believes that it is consumers and companies that (should) decide which payment gateway to use.

“Companies are already spending crores of rupees on Google ads, then there is a charge on the income made be it 15% or 30%. My view is that app ecosystems should be independent of Google or Apple,” he said.