Startups Mull Disclosing ‘Google Tax’ In Fight Against Play Store’s Hefty Commissions

Close on the heels of Google delisting the apps of 10 startups from Play Store, Indian founders are mulling novel ways to mount a counter-offensive.

The founders are looking at levying a ‘Google Fee’ or a ‘Google Tax’ on its end customers in a bid to pass on the costs related to hefty commissions charged by the tech major. With this, the startups are looking to build public opinion against Google’s user choice billing (UCB) system.

The move comes in the backdrop of the big tech major delisting the apps of some of the biggest Indian startups for not complying with its new billing policy. 

Multiple new-age tech companies have been hit by the diktat which include names such as Bharat Matrimony, Info Edge-owned 99acres and Naukri, Shaadi.com, dating apps Truly Madly and Quack Quack, OTT platforms – STAGE, Altt (formerly Alt Balaji) and Aha – social networking app FRND, among others.

Many startups also claim that they received the notice for delisting only in the morning on Friday (March 1) and then their apps were taken down in a matter of hours without any clarification. 

While Google says that it has given enough time to the startups to comply, founders rue the exorbitant fees, in the range of 11-26%, imposed by Google. And this is just the tip of the iceberg. 

What’s The Bone Of Contention?

The story harks back to 2022 when the Competition Commission of India (CCI), in a landmark verdict, found Google guilty of abusing its dominance with regards to its Play Store policies. In its order, the watchdog directed the tech major to pay a fine of INR 936 Cr and undertake sweeping reforms to its operations in India. 

One of the key changes that Google India made was introducing a new billing system called the UCB to assuage the regulators. While the previous regime mandated commissions in the range of 15-30%, UCB offered a rebate of 4% and set the developer fees in the range of 11-26%.

Unlike the previous in-app payment system, Google also opened up its walled garden to enable third-party payments avenues in UCB for apps listed on Play Store. However, the devil was in the details. 

Founders opine that the exorbitant commissions hurt their businesses and margins especially in the price-conscious Indian market. In addition, they also told Inc42 that startups have to furnish extensive paperwork as well as data related to third-party transactions to Google on a regular basis, which makes the point of having external payment gateways moot. 

Not convinced, multiple startups filed petitions before the Supreme Court as well as Delhi and Madras High Courts against the new policy and sought its revocation. In its petitions, startups alleged that UCB is just a cloaked version of the previous policy. 

While the case is still pending before the Supreme Court as well as the CCI, Google’s move to delist apps and go ahead with the implementation of the user choice billing system came as a bolt from the blue for the startups. 

The aftermath of the delisting spree saw some of the biggest names in the Indian startup ecosystem publicly lash out at Google and called for the reinstatement of the apps. However, no headway has been made so far.

Indian Startups Thrash Google

First on the list was Matrimony.com’s Murugavel Janakiraman who called it a dark day for the Indian internet ecosystem and said that Google was using its dominance in the app marketplace space to stifle Indian developers and startups. 

Terming the delisting a direct contravention of the 2022 order by the competition watchdog, Truly Madly cofounder and CEO Snehil Khanor told Inc42 that the company is looking at potential legal actions against Google in this matter. 

He even went on to equate the commissions charged by Google with British-era “lagaan”, adding that Google wanted to become even bigger at the expense of Indian startups. 

Seeking union government’s intervention, People Group (Shaadi.com’s parent) founder and CEO Anupam Mittal claimed that it was “amazing how quickly” Google has gone from their previous motto of ‘Don’t be evil’ to “hallucinating like their GenAI Gemini”.

Chiming in was OTT platform STAGE’s cofounder and CEO Vinay Singhal who claimed that Indian startups were feeling akin to “Digital Ghulams” (digital slaves) of Google, adding that the tech giant was killing Indian startups.

QuackQuack’s Ravi Mittal said that Google’s move to delist Indian startups from Play Store could have a direct bearing on the thousands of individuals employed by the ecosystem and raised concerns about Google’s abuse of dominance in the space.

Amid all this, Indian startups also launched a multi-pronged offensive against the tech major. Multiple founders are now batting for a state-backed app marketplace, modelled on the lines of digital public infrastructure such as the UPI and ONDC, to curb the dominance of the big tech major. 

“Indian companies will comply – for now. But what India needs is an App Store / Play Store that is a part of Digital Public Infrastructure – like UPI and ONDC. The response needs to be strategic,” said Info Edge’s Bikhchandani.

Chiming in, STAGE’s Singhal claimed that Google makes it impossible for its competitors to survive and sought the incorporation of a state-backed platform to enable listing of apps.

Google also came under fire from industry bodies who also called for reinstating the delisted apps.

Industry Bodies Lambast Google

Not holding back, think tank Alliance of Digital India Foundation: (ADIF) said that it was deeply disappointed and concerned by the “unilateral and arbitrary actions (delisting of apps) of Google”.

“By delisting apps and issuing blog posts, Google is trying to intimidate and coerce the developers who have dared to challenge its exploitative policies. This is not a matter of ten developers, but a matter of the entire Indian digital sector that is being threatened by Google’s dominance and monopoly,” added an ADIF spokesperson. 

Industry body Internet and Mobile Association of India (IAMAI) also urged Google to roll back the decision of delisting the apps of Indian startups. It also said that at least four of its members were impacted by Google’s move.

“The affected members of IAMAI are of the view that a substantive hearing of the case is pending before the Supreme Court of India, and Google should not take any coercive action during the pendency of the case,” added IAMAI. 

As tensions escalate between Indian startups and Google, all eyes are now on what the SC and the CCI decide on the matter. Till then, the fracas could rapidly evolve into a major crisis that could engulf the entire ecosystem and have a material impact on the financial well-being of the platforms.