The Alliance of Digital India Foundation (ADIF) has filed a petition with the Competition Commission of India (CCI) on behalf of India’s app developers and startup community in response to Google’s new pricing policy, which will take effect in March 2022. Google’s suspected abuse of dominance in India’s smartphone, smart TV, and app markets is presently being investigated by India’s competition authority.
In a statement, the ADIF said it had requested relief on behalf of app developers since Google’s new policy would force certain types of applications to exclusively take payments through the Google Billing System (GBS).
“This would be an issue for app developers because GBS charges 30 percent commission for all transactions on the Google Play Store, compared to 2 percent charged by other payment processing systems. There is a strong case for seeking such relief as this new policy, when it goes into effect next March, would have a destructive effect on the operating margins of a large number of startups and make their business models infeasible,” ADIF said in a statement.
Google had previously required app developers that use its Android Play Store to conduct all transactions through the company’s billing system, for which the company will charge a 30% fee.
After startups and app developers voiced concerns about Google’s approach and took the subject to regulatory authorities, the Mountain View, California-based company, delayed its stance. They said that the search engine behemoth is abusing its hegemony in the Android market. In India, Google has roughly a 97 percent market share.
The problem is not limited to India. In the United States, for example, Google is the subject of the largest antitrust investigation in decades, with the US Department of Justice alleging that the tech giant is abusing its monopoly by engaging in unethical business practices and paying companies millions of dollars to promote its search engine in their products.
In November of last year, the CCI instructed the Director-General to look into the problem of paid applications and in-app purchases being forced to utilise Google Play Store’s payment mechanism. The commission believes that such a restriction is discriminatory since it inhibits app developers’ freedom to choose their preferred payment processing solution.
In its appeal to the commission, ADIF, which represents the interests of different stakeholders such as startups, app developers, and others with the goal of strengthening the country’s startup environment, claims that Google’s 30% commission is excessively high and unjust. According to the organisation, the main concern is the forced use of the Google Play Billing system and the exclusion of other payment methods.
“This will have a disastrous effect on India’s digital ecosystem by reducing choices available in the hands of app developers and users as well as harming the country’s innovation ecosystem by disrupting the cost structures and margins of multiple industries,” it said.
“ADIF foresees that barring an order passed by this Hon’ble Commission to maintain status-quo until the completion of the ongoing inquiry, Google shall proceed to enforce its terms on the Play Store, thereby leading to adverse and irreversible consequences on India’s fledgling startup ecosystem,” said Sijo Kuruvilla George, Executive Director, Alliance of Digital India Foundation.
