The move is expected to escalate the three-year legal tussle between Indian startups and the tech giant over the Play Store policies. Despite protests from startups about Google’s sudden app suspensions, legal experts said the firm’s policy stance could bolster their case in the upcoming Supreme Court hearing.
“Our apps were taken off the Play Store on Friday morning along with a notice and a blog post detailing Google’s policy on Play Store payments. There were no prior intimations on this matter, and we are going to look for legal recourses against Google both for the long-term and short-term,” said Murugavel Janakiram, founder and chief executive, Bharat Matrimony, which had multiple apps with over 5 million net downloads on the Android applications marketplace.
While several apps by Bharat Matrimony, which could be downloaded from the Google Play Store until Friday noon, are now inactive in India, others, People Group’s Shaadi.com apps received Google’s notice but were not immediately suspended. Info Edge’s matrimonial platform Jeevansathi, property search platform 99acres and job search platform Naukri were suspended from Play Store.
Sanjeev Bhikchandani, founder and executive vice-chairman, Info Edge, said the notice took the company by surprise. “To our mind, we have been compliant since 9 February on Jeevansathi. We have paid all invoices on time. We’re in touch with Google, and replying to the notice saying that we are compliant.”
“For an extended period of time, 10 companies, including many well-established ones, have chosen to not pay for the immense value they receive on Google Play by securing interim protections from court. These developers comply with payment policies of other app stores. No court or regulator has denied Google Play’s right to charge for the value and services we provide,” Google said in a statement.
“On 9 February, the Supreme Court also refused to interfere with our right to do so… After giving these developers more than three years to prepare, including three weeks after the Supreme Court’s order, we are taking necessary steps,” Google’s added.
“While we always try to work with developers to help them through our policies and find feasible solutions, allowing this small group of developers to get differential treatment from the vast majority of developers who are paying their fair share creates an uneven playing field across the ecosystem and puts all other apps and games at a competitive disadvantage. Enforcement of our policy, when necessary, can include removal of non-compliant apps from Google Play.”
Google’s action has sparked outrage among startups, prompting calls for the development of alternatives to Play Store. However, experts it might not be easy considering Google’s extensive reach. According to market researcher StatCounter, Android accounted for more than 83% of the over 700 million smartphone users in India as of January-end.
Startups alleged that Google is abusing this power, prompting them to seek relief from the Competition Commission of India (CCI) and the Supreme Court.
“Google is a modern-day monopoly, and is on a hunt to collect rent. These (app suspension) actions will completely destroy many businesses, and make a lot of products unaffordable for a majority of the country,” said Vinod Kumar Meena, cofounder, Kuku FM.
Anupam Mittal, founder and CEO of People Group, described the move as “a blatant violation of CCI’s order.” In its second order of 2022, the CCI penalized Google ₹936.44 crore ($113 million) for “abusing the dominant position of its Play Store in the country” by compelling startups to utilize its payment interface, thereby earning incentives ranging from 11% to 30%, based on each app’s earnings.
While Google has challenged the CCI order, both the ongoing case and the latest instance are under judicial consideration. Final hearings on the matter are pending before both the CCI and the Supreme Court.
Anand Lunia, founding partner of early-stage investor India Quotient, termed the notices “an absolute violation of the CCI order.” Lunia’s statement reflected a generally negative investor sentiment towards Google’s move—which could hurt homegrown startups’ ability to raise meaningful capital in the long run. Investors and the startup community are thus set to challenge the move.
A senior legal consultant who works closely with Google, requesting anonymity, said Google’s present Play Store policy has allowed companies to set up their own browser-based payment gateways and interfaces, in order to receive payments for subscriptions and services outside of Google’s ecosystem—and thereby not pay any service fees to Google. “Companies are free to invest in their own payment infrastructure, which should be a fair solution,” he added.
However, startups perceive this negatively. Bharat Matrimony’s Janakiram said this model, which Google calls ‘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, in order to make any purchases in the app—no payment method is allowed within a mobile app,” he added.
Rameesh Kailasam, president and chief executive of industry body, IndiaTech.org, said such a move “will destabilize businesses in India, and also undermine the cash flows and ability for Indian startups to attract strong investments from global and local investors in the affected sectors”. “The options offered will also create friction in user experience besides creating severe problems for startups and consumer internet tech companies.”
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Published: 01 Mar 2024, 09:21 PM IST