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Why Indian Startups Are Rallying Against Google's Play Store Policies

Editor, TRANSFIN.
Oct 6, 2020 1:42 PM 5 min read
Editorial

The anti-Big Tech backlash is not limited to regulatory diktats and congressional hearings. It has lately taken a rather competitive turn with young-er (tech) companies teaming up to take on the alleged monopolisation by Big Tech.

The target - at least for now - is Google, and the battlefield is its app store a.k.a. The Play Store.

A Timeline of Tech Troubles

Around two weeks ago, the Paytm mobile app was abruptly removed from the Play Store.

Google said the payments app violated its ‘gambling policies’ by offering scratch card-based cricket promotions.

Paytm was back online in a matter of hours, but the simmering conflict between Google and app developers was finally out in the open.

A few days after Paytm’s temporary ban, Google issued notices to Zomato and Swiggy, objecting to similar gamification features (also for IPL promos).

Then came the spark that lit the fuse. Google announced last week that it would be more stringent with the enforcement of its Play Store billing policies. This meant: 

  1. apps would be required to use the Play Store billing system for any in-app purchases, and
  2. Google would charge the app developer 30% of the transaction’s cost as its commission.

 

Entrepreneurial Insurrection

The above trail of events set off a domino effect that has led to dozens of Indian startups vocally accusing Google of strong-arming them by exploiting its premier position in the app ecosystem.

FYI: nearly 96% of Indian smartphone users use Android OS.

Paytm CEO Vijay Shekhar Sharma led the charge, accusing Google of acting as the “judge, jury and executioner”.

“Be the app that you want to see in the world. Condition: If only Google lets you be,” he tweeted on October 2nd. (BTW, full points for managing to pay tribute to Gandhi and lambasting Google’s policies in less than 280 characters.)

The Indian startup opposition consolidated over the past week. Entrepreneurs held two video conferences to come up with a strategy to combat what one of them called Google’s “digital monopoly”. A larger plan to fight the tech giant’s dominance by approaching regulators and the courts was also considered.

For now, two major developments emerged from this coalition of the willing:

  • First: The Indian Government announced a few days ago that it is open to the idea of developing a homegrown made-in-India app store.
  • Second: Paytm announced the launch of its own “mini-app store” to rival Play Store. This happened on October 5th.

Let’s explore each of these ideas one by one…

 

An Atma Nirbhar App Store?

Interestingly, the Government already has an app store of its own. It’s called the eGov App Store and was launched in 2013. eGov currently has a repository of 1200+ Government apps.

One idea being floated is around expanding this app store to include private-sector apps as well.

Crucially, the Government has said if an Indian app store were to materialise, it will make it compulsory for Google to pre-install this state-backed app store onto all Android smartphones (the same way Play Store comes pre-installed).

Why is this point crucial? Simply because Google spectacularly dominates the Indian app space.

You may object to its practices, but you can’t deny that Google rules the roost. And consumers can be hesitant to change their behaviour. If they have Play Store pre-installed and it has all the apps they require, they won’t have much incentive to download a new app store.

Then there’s the sheer number of apps. In Q2 2020, Google Play Store had 2,700,000 apps. Startups like Paytm and the 300+ companies that have apparently already joined its mini-apps venture are major and already-established players. They can afford to shift to an Indian app platform and still be dominant in their sectors simply because they have enough clout and brand recall. But for smaller and newer apps, Play Store gives them an audience that is literally international, and this is something they might be reluctant to compromise on.

And even if an India-made app store comes pre-installed in Android smartphones, dethroning Google is easier said than done. It is a tech tsar for a reason. It has developed actively over the years to make its platform convenient and seamless for both developers and users alike. Convincing millions of smartphone users go app store hunting is likely to be a long and uphill climb.

(FYI: This isn’t the first time someone tried to beat Google at its own game. Amazon’s app store has consistently trailed behind its Mountain View competitor. And Blackberry spent billions to lure developers to its app platform...only to later announce that its app store would be effectively shut down by 2019.)

 

What is a Mini-App Store?

Mini-app stores are basically custom-built mobile websites that give users an app-like experience of its services without having to download more than one app. Meaning, many apps are hosted on a single platform, which would be the only app download required.

Paytm launched such a store on October 5th. A host of different platforms essentially allow users to access their products or services via the Paytm app interface. For Paytm users, “it will be a seamless experience that doesn’t require any separate download and enables them to use their preferred payment option,” as the payments company’s CEO put it.

This mini-app store has reportedly been running in its beta version with select users and witnessed “over 12 million visits in September”. Over 300 businesses have reportedly enrolled themselves on the platform, including Decathlon, 1MG, Netmeds and NoBroker.

Paytm said listing and distribution of these apps within Paytm would be provided free of charge. Developers would be given the choice of different payments systems - Paytm Wallet, Paytm Payments Bank, UPI and cards. While the last option would be levied a 2% charge, the others would be free.

But again, a mini-app store would confront the same challenges as what a made-in-India app store would face.

 

What is Google’s Argument?

Google denies exploiting its position to trample upon startups. It argues that its billing policies are not new - they were just not enforced till now. And it claims that “less than 3% of developers with apps on Play Store sold digital goods over the last 12 months,” and that of this 3%, nearly 97% already use Google Play’s billing.

To be fair, the tech giant has not turned a deaf ear to the criticisms. It said it would delay imposing its 30% commission rule until April 2022 for the Indian market. And it has arranged for seminars and discussions with those concerned to try to allay their fears.

 

Bringing the Google Goliath to the Ground

Meanwhile, the anti-Google backlash continues to advance within the startup industry globally, not just in India. In the US, big names like Spotify, Epic Games and Match Group (Tinder’s parent) have raised similar concerns over the 30% rule. They have formed a nonprofit alliance called Coalition for App Fairness to take on Google and Apple (App Store charges the same commission rate).

But in the backdrop of this rising chorus of complaints is the reality of Google’s absolute dominance. This is what makes an Indian app store or a widely used mini-app store an attractive idea, but not an easy one.

Getting a giant to fix his ways is one thing. Dethroning him is another ball game altogether.

On Saturday, many Indian startup founders including Paytm’s agreed to collate a list of grievances to take to the Government.

To put all their inputs in one place, a Google document was shared within the group.

FIN.

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