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Google 'repeatedly disobeying' CCI's orders on billing: Startup think tank

Accuses tech giant of charging an "exorbitant" commission without providing additional service, while India's entire payment industry is working on 1-5% service fees

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Google (Photo: wikimedia commons)

Sourabh Lele New Delhi

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The Alliance of Digital India Foundation (ADIF) has accused Google of “repeatedly disobeying” the orders by Competition Commission of India (CCI) and pushing Indian app developers to use the Google Play Billing System (GBPS) for in-app purchases and subscriptions.

The think tank of Indian digital start-ups said on Tuesday that Google’s policy of charging a commission of 11-26 per cent on alternative billing systems would make it economically unattractive for app developers. It added that the tech giant is charging an “exorbitant” commission without providing any additional service, while India’s entire payment industry is working on 1-5 per cent service fees.

The CCI had, in October 2022, ordered Google to allow app developers to use any third-party billing or payment processing services for purchasing apps, as well as in-app purchases. Google started acting on the order in January after the Supreme Court refused to grant any interim relief in the matter.

The revised policies of Play Store allowed app developers to offer alternative billing systems to users, apart from Google Play’s system. However, the app store will charge a service fee on such transactions, which is 4 per cent lower than the 15-30 per cent fees charged on payments through GBPS. Therefore, the effective service fees on payments through an alternative billing system stand at 11 per cent for the first $1 million earned by the developer in revenue each year, and 26 per cent for earnings above it.

AIDF argued that developers would still be liable to pay processing fees to third-party service providers in addition to Google’s 11-26 per cent fees, making developers shell out at least the equivalent, if not more, of the 15-30 per cent GPBS fee they pay today.

“The resulting increase in charges borne by developers creates an uneven playing field for digital startups entering the Android ecosystem and additionally widens the digital divide for millions of Indian users. This would take away a huge chunk of the revenue made by Indian app developers and startups and would render business models of many young startups unviable, especially those relying on in-app purchases, paid apps or subscriptions,” ADIF said.

It added that the policy would impact many startup sectors, including gaming, education, music, video content, fitness, and matrimony and dating apps. It warned that Indian entrepreneurs will not be able to invest in innovation, expansion and economic products.

On the other hand, Google believes the fees are necessary for a sustainable business model in the Android ecosystem. However, queries sent to Google did not elicit any response till the time of publishing this article.

“Google Play’s service fee has never been simply a fee for payment processing. It reflects the value provided by Android and Google Play, and all of the developer services we offer, including app distribution and discovery, the commerce platform, developer tools, analytics, training, and more,” says a console page of Google Play.

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First Published: Mar 28 2023 | 3:51 PM IST

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