Google recently provided clarity about its policies, where apps that sell digital goods within the Play Store have to use its billing system, which allows the tech giant to collect a percentage of in-app purchases as a fee. Some of the Indian start-ups and unicorns have made claims about Google abusing its monopoly, enforcing the billing system, and take a 30 per cent commission on the transactions.
All apps distributed on the Google Play Store, that are offering in-app purchases of digital goods, need to use Google Play’s billing system. Google said this isn't new and its payments policy has always required this. Google Play billing has always taken a 30 per cent commission on these transactions. It said this will only apply to less than 3 per cent of developers with apps on Play Store, as 97 per cent are already using the Google Play billing.
For those a few developers that need to update their apps, they will have time until September 30, 2021, to make those changes. New apps submitted after January 20, 2021, will need to be in compliance.
“Choice is central to Android -- the Google Play billing policy only applies to developers that implement in-app purchases of digital goods,” said a Google spokesperson. “Developers are welcome to implement digital purchases outside of Google Play Billing and continue to reach global audiences through Play Store, without any service fee.”
Google said it has always been deeply vested in facilitating start-up ecosystem growth, with numerous outreach programs that offer mentorship and guidance to a wide spectrum of developers. Consumer spend on apps and games created by the Indian developers has doubled year to date, when compared to the same period last year. Indian developers also saw growth of more than 80 per cent in consumer spending from users outside of India, compared to the corresponding period last year.
“We remain committed to supporting Indian developers to succeed globally,” said the Google spokesperson.
“For start-ups, digital advertising is their primary mode of acquisition of customers, and the fact that Google is taking 30 per cent of billing, really hurts,” said Salman Waris, managing partner at technology law firm TechLegis Advocates and Solicitors. “Today (digital) companies don’t even make a 30 per cent EBITDA profit. Other payment modes, such as credit cards and debit cards, take a 1.5 per cent commission. Google is just a distribution company or intermediary so what is it charging this for."
What other choices do developers have? Developers have always had a choice, and can distribute their app however they like. Google said Android platform provides developers with the freedom and flexibility to distribute apps through other Android app stores, directly via websites, or device preloads, all without using Google Play’s billing system.
Google said Play’s billing system will not be required for apps that sell physical goods, for example, ride-hailing services. It is also not required if there is no transaction within the app paying for a content subscription via the developer’s own website.
"Today, they (Google) mentioned digital services. Tomorrow, they can widen it to food delivery and companies offering physical services,” said Waris of TechLegis.
However, what about businesses that have moved their services online? Google said it recognizes that the global pandemic has resulted in many businesses having to navigate the challenges of moving their physical business to digital and engaging customers in a new way, for example, moving in-person experiences and classes online. For the next 12 months, these businesses will not need to comply with Google’s payments policy.
“We will continue to reassess the situation over the next year,” said the company. For developers undergoing these changes, Google said it remains eager to hear from them and work with them to help them reach new users and grow their online businesses while enabling a consistent and safe user experience online.
“Most SMBs (small and medium businesses) are still navigating through the setbacks from the pandemic,” said Vaibhav Vasa, director at Biz Analyst, a SaaS management mobile application platform. “Turning towards digitization was a viable solution that has now come under the scanner given their budget constraints.”
For many founders of the Indian start-ups, Internet and Mobile Association of India (IAMAI) said Google’s announcement, brings back fears of the not so old deeply problematic revenue share model between VAS (value-added service) providers (mainly digital goods) and Telcos. It said Telcos took up to 70 per cent revenue share from VAS companies on the pretext of discovery, marketing, collection. In India, 98 per cent of people use mobile internet, more than 90 per cent of people use android phones which gives Google control over many layers between customers and their service providers.
“Just because Google owns the gate and the gateway to the digital ecosystem of this country, they should not act arbitrarily and enforce their rules and regulations which are contrary to our country’s laws,” said Vishwas Patel, Founder, CCAvenues and Chairman, Payments Council Of India, in a statement. “Google should not exercise its dominant position, rather allow a level playing field for everyone in the ecosystem.”