Indian Apps Vs Google 

Chaos, anger and then some relief. It’s been a rocky two days for some of the biggest apps in India, between Thursday night and Saturday afternoon. While the standoff between Indian app publishers and internet companies and Google Play is more than three years old, the relations between the two sides have not been worse than now.

The latest feud began after Google delisted dozens of Indian apps from its Play Store.

While founders claimed Google’s actions were anti-India, the tech giant said it had given three years to the apps to comply with new terms of service for the Google Play Store. By midday on Saturday, the government seemed to have stepped in and many of the delisted apps were restored, though Matrimony continues to remain impacted, as per founder Murugavel Janakiraman.

Before we get to the bottom of the past 48 hours and what will happen next, let’s take a look at the other top stories of the week from our newsroom:

• Rise Of Semiconductors: India’s is eyeing semiconductor supremacy and startups are looking to become the engines of this future. Here’s a look at the startups laying the foundation for India’s semiconductor boom
• Celebrating D2C Mavens: The FAST42 list is back. And in the third edition, we unveiled not just 42 but 52 of India’s most innovative and disruptive D2C brands that are moving the needle in the new-age retail market
• BYJU’S Blames Investors: Troubled edtech major BYJU’S has blamed investors for its delay in paying employee salaries after claiming that it has successfully closed its $200 Mn rights issue, which is being contested in court

The App Store Rollercoaster

The startup ecosystem went into a tizzy on Friday after it was reported that Google sent notices to internet companies such as Shaadi.com, TrulyMadly, Matrimony, Kuku FM and others, saying it would take action to delist their apps for non-compliance with Play Store policies. It removed  dozens of apps soon after and later published a blog to explain its actions.

While the tech giant relied on a Supreme Court decision in its favour, the companies, which filed that case, claimed Google continues to violate the Competition Commission of India (CCI) ruling from 2022. Bharat Matrimony, Shaadi.com, Unacademy, Kuku FM, and Alt Digital Media were among the companies that filed the petition in the Madras HC soon after the CCI ruling, which the Supreme Court then heard.

Even as Info Edge — the parent company of Naukri, 99Acres and Jeevansathi — claimed on Friday noon that its apps were not delisted, this changed by the evening. And by Saturday morning, Chennai-based Matrimony said 100 of its apps have been delisted and new business has effectively shut down.

Then on Saturday, Union Minister For IT and Telecom Ashwini Vaishnaw said that actions such as delisting cannot be permitted. “The government takes a strong view of Google delisting some apps from the Play Store. We will not allow delisting of apps,” Vaishnaw told PTI.

Now, the IT minister is expected to hold a meeting with Google and the impacted companies over this issue. The next few days will involve some high-level meetings and most founders are hoping that the government brings Google to task once and for all, according to one of the entrepreneurs whose apps were delisted by Google Play.

What Went On Behind The Scenes?

Many are saying the government’s intervention forced Google’s hand as it reinstated Shaadi.com and five of Info Edge’s apps, including Naukri, Naukri Recruiter, Naukrigulf Job Search, 99acres and Shiksha. Info Edge founder Sanjeev Bikhchandani said, “The efforts were well-led by Hitesh [Oberoi, CEO] and the entire Info Edge team, working tirelessly through the night for this successful crisis management.”

Similarly, other founders we spoke to said work had been going in the background with government officials as well as with the Google team to immediately bring the apps back. Some suggested more ways of drumming up public support such as publishing the amount being paid in commissions to Google, or the ‘Google Tax’.

The biggest complaint from startup founders has been around the lack of transparency and Google’s inability to work with Indian startups directly to solve the issues.

A founder of a Delhi NCR-based tech company told us, “Google can cut sweetheart deals with Western app companies like Spotify, but it’s not willing to extend this to Indian apps, which have a similar number of users or more, in many cases. Even if the argument is that it’s a private platform and can set its policies, we can argue that it is unfriendly to the businesses, like any customer can.”

Other founders used terms such as ‘Internet Lagaan’ and ‘Digital East India Company’ to describe Google’s actions. People Group (Shaadi.com’s parent) founder and CEO Anupam Mittal claimed Google has gone from its previous motto of ‘Don’t be evil’ to “hallucinating like their GenAI Gemini”.

Did Google Bypass The CCI Order?

The CCI in its order dated October 25, 2022, found Google guilty of abusing its dominant position and imposed eight behavioural remedies, including a penalty of INR 936.44 Cr.

In response, Google amended the Play Store policy to allow companies to set up their own browser-based payment gateways and interfaces or user choice billing. One of the ways companies can implement this is through the consumption model, but even this is not ideal, founders said.

Founders told Inc42 that user choice billing has similar or higher commissions than using Google’s native billing system. Under Google Play Billing, developers were compelled to pay a commission of 15%-30%, but user choice billing only reduced this to 11%-26% and over and above this app makers have other payment gateway charges for each in-app transaction. Essentially, Google’s amended policy is a worse deal for Indian app makers.

Matrimony’s Murugavel Janakiraman, for instance, said, “Google’s consumption model will mean that users will not be able to make any payments for any services on a mobile app. They will instead have to be redirected to a desktop browser to make any purchases in the app—no payment method is allowed within a mobile app.”

Others told us that Google is not willing to budge, and this is why it’s hard for founders to negotiate with the company in good faith. “There’s a feeling that if we agree to Google’s terms now, it will decide to increase it in the near future or make it more difficult for us to get paying customers. There’s no trust in Google,” the cofounder of a Bengaluru-based media platform told Inc42.

While most of the ecosystem is seething, some are sympathetic to Google’s stance. We have seen arguments that companies knew about what was happening for three years, and the tech giant’s actions cannot be called sudden. Others also claimed that as a private company, Google can set its policies for customers, just like Apple does.

For instance, the Play Store commissions are different from what Apple charges, but at least one founder who has criticised Google for anti-competitive practices admitted that Google gets more flak because of its market share in India.

It is pertinent to note that the CCI launched a probe into Apple’s policies in December 2021 following allegations by NGO ‘Together We Fight Society’ about allegedly high commissions charged by the Apple App Store and the lack of third-party payment options on the app store. At the time, the Alliance of Digital India Foundation — an industry body comprising several startups — and the US-based dating giant Match Group also filed similar cases.

The complaints said Apple made it compulsory for app developers to use its in-app payment solution for distribution of paid digital content and pay a 30% commission. But Android is the clear market leader with an 81% share as of Q3 2023, while Apple’s iOS has a market share of 16%, according to Counterpoint Research.

Naturally, revenue from Android users is likely to be the major source of income for app publishers in India, and therefore the higher commissions on Google pinch them more. Add to this the fact that customer acquisition is not inexpensive in India and giving up a big share from every paying customer is damaging for the profitability of these platforms.

Can Play Store Alternatives Thrive?

The fight between Indian apps and Google is only about to get more intense in the next few weeks, as many are exploring accelerating the launch and promoting alternative app stores. PhonePe-owned Indus Appstore is among the front-runners to become a major Google Play Store alternative.

Even though Indus has been launched officially, it is not yet pre-installed on devices. Users have to download the app separately from the Indus website and then use the app store. As PhonePe cofounder and CEO Sameer Nigam told us a few weeks ago at the Indus Appstore launch, the company is in talks with phone makers for native integration of the app.

Indus Appstore’s launch in Delhi played host to Info Edge’s Bikhchandani, Matrimony’s Janakiraman, MapmyIndia CEO Rohan Verma, Dream11’s Harsh Jain, Hungama MD Neeraj Roy, Dailyhunt’s Virendra Gupta as well as IT minister Vaishnaw. These companies have come on board as partners for the app store, but these are early days for Indus.

Having Indus Appstore on new phones out of the box would increase engagement, but this is likely to take a few months. And it would also require PhonePe to strike high-value commercial deals with OEMs such as Oppo, Samsung, OnePlus, Xiaomi and others that are market leaders in the Android smartphone market.

Founders and investors we spoke to also suggested that the Indian internet industry can take a page out of the digital public infrastructure book to solve the app store problem.

Asking the government to directly create an alternative might not be feasible, said a Delhi-based partner at a growth fund, but working within existing frameworks is possible. “Why can’t we have apps on an ONDC-like network where any device can access them? It’s not that far-fetched given our reliance on digital public goods in recent times. It’s time to think seriously about alternatives, instead of asking the government for help every time.”

Sunday Roundup: Startup Funding, Tech Stocks And More

 

• Funding Bounces Up: After a slight dip, startup funding seems to have gained momentum in the last week of February, which saw $381.4 Mn raised across 27 deals, taking the total funding for 2024 to over $1.2 Bn
• Digit Gets Go-Ahead: Insurtech unicorn Digit Insurance has received SEBI’s nod for its IPO, nearly a year after refiling the DRHP for a fresh issue of INR 1,250 Cr and an offer for sale (OFS)
• Startup India’s Next Phase: The Bharat Startup Ecosystem Registry will provide a platform for scaled-up startups to mentor and help young entrepreneurs in a responsible way, believes DPIIT joint secretary Sanjiv

• Paytm’s New Avatar: Fintech major Paytm terminated inter-company agreements with the Paytm Payments Bank and will sign new partnership deals for its various services