New Delhi Startups and developers in India are lobbying against service charges levied by Google for digital goods and services sold through its Play Store. The Competition Commission of India (CCI) ruled earlier this week, which 936 crore fine on the technology major for anti-competitive billing practices on Play Store, said industry stakeholders, has prompted startups that were already pushing for lowering the company’s desired commission rate.
The feud between app store operators Google and Apple and developers is nothing new.
The founders of firms like Paytm and Bharat Matrimony have spoken out against Google’s fees for more than a year. The original information filed with the CCI that led to the penalty this week is the result of a back-and-forth that began a year ago. Google and Apple have also faced similar pushback in the US and EU.
“We are against being forced to pay commission on all transactions. It is like a tax. Why should you pay commission to Google for everything you sell,” said the founder of an Indian firm , who was the first to speak out against Google in 2021. The person noted that the CCI’s order is a “clear directive” to Google, and if the tech giant doesn’t comply, startups could turn to “other measures,” including going to court.
The CCI’s decision has no effect on commission firms like Google Charge. It only mandates that the company cannot force its own billing system on the Play Store, and must allow other app stores on its platform.
Google is “reviewing” the CCI order, it said on October 26.
The company started allowing third party payment services on Play Store apps in September this year.
However, industry stakeholders alleged that Google still charges a commission, which many consider to be excessive and unfair. Ramesh Kailasam, president and chief executive of industry body IndiaTech, said Google offers a 4% merchant discount rate even when a developer uses a third-party billing service.
“This can kill the startup ecosystem and drive them out of the app economy. This can be seen as a gross abuse of the dominance of the operating system market, as the normal use of payment gateway interfaces for any online transaction is the norm. It is generally around 1-3%. Thus this commission rate can be challenged by startups, which is in line with the order of CCI,” said Kailasam.
Google mandates the use of Google Play Billing System (GPBS) for developers who offer in-app purchases. From October 31, non-compliant apps may face suspension from the Play Store.
The company also introduced a pilot program for using third-party payments in India and other countries on September 2. However, developers participating in the pilot will also have to adhere to the use of GPBS in India.
shouvik.das@livemint.com
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