‘Google’s Reduction Of Play Store Commission Inadequate’; Startups To Continue Crusade For Level Playing Field

Following resistance from the startup community and amid an ongoing antitrust probe, Google has halved its proposed commission levied on developers selling digital goods using Google Play Store and its in-app payment system. However, the move has been unable to cut much ice with the Indian startups.

Terming the move as a “deflect and distract” tactic, startup and technology industry body Alliance of Digital India Foundation (ADIF) has vowed to “double down its efforts to protect fair competition and developer choices in-app economy”.

Sijo Kuruvilla George, Executive Director of ADIF said, “The fact that Google is able to unilaterally declare and dictate prices, as is evident from this announcement as well, lies at the heart of the issue. What developers are asking for is fairness and not benevolence in the form of “reduced” commission percentages. It has never been about the percentages. Price discovery should be left to the market forces.”

He was of the view that Google should not be able to unilaterally dictate prices and the industry stakeholders must have a say. 

“The portrayal and grandstanding, as a measure that fully acknowledges and addresses the concerns of developers, is misleading and objectionable,” George added.

Speaking to Inc42, Ravi Mittal, Founder and CEO of Quack Quack, says that Google’s unilateral decision on imposing the fee and setting the commission amount is an abuse of market competition.

“The reduction of the commission to 15% shows that Google is on the backfoot. They are not able to justify such high and arbitrary fees. The commission eventually has to go away,” he said.

Murugavel Janakiraman, Founder and CEO, Matrimony.com said that it is a half-hearted measure by Google as the core issue is not about the percentage of commission charge.

“Forcing developers to remove other gateways and enforcing the use of their own payment system is absolutely unfair. Our fight is purely on the fact that Google is taking away the ability to choose the payment gateway that we want,” Janakiraman added.

Winzo’s cofounder Saumya Singh Rathore said that despite the reduction, the commission is still significantly high for a small reach on a crowded platform of Google Play Store.

In September 2020, global tech giant Google stated that it would charge an industry-standard 30% cut on transactions for developers selling digital goods using Google Play Store and its in-app payment system. The fee would, after 12 months, drop to 15%, it had said then.

Amid continuous backlash from Indian stakeholders due to its monopolistic policy, in a recent blogpost, Google said that it will reduce the service fee to 15%.

“To help support the specific needs of developers offering subscriptions, starting on January 1, 2022, we’re decreasing the service fee for all subscriptions on Google Play from day one,” it said in the blog.

The development comes just over 10 days after ADIF approached the Competition Commission of India (CCI) seeking interim relief from the new commission policy of Google PlayStore.

This policy is scheduled to come into effect on March 31, 2022. Apps on Play Store would also have to remove other payment gateways from their apps and comply with Google’s duopolistic terms. Apple, too, charges a 30% commission on its App Store for iOS-powered mobile devices. 

The policy was initially scheduled to come into effect from January 2021, but was postponed due to backlash.

The antitrust body is already probing the tech giant over anti-competitive practices.

In November 2020, CCI had directed a probe into the tech giant’s policy which asked for mandatory use of Google Play Store’s payment system for paid apps and in-app purchases. The commission is of the prima facie view that such a policy is unfair as it restricts the ability of app developers to select a payment processing system of their choice.

The investigation arm of the CCI has also found Google India guilty of adopting anti-competitive, unfair and restrictive trade practices in the mobile operating system and related markets.

In the investigation, Google India was guilty of stifling competition and innovation that affects the market as well as consumers through dominating the internet search, music (YouTube), browser (chrome), app library (Play Store) and other key services.