Is it time that India should have it's own OS and app ecosystem? If we go by what the industry experts say, India must now come up with its own software platform. The Made in India platforms should serve as an alternative to break the monopoly of the dominant operating systems and app stores currently in use which not only takes away money to their home countries but also are reluctant in listening to the concerns of Indian businesses.
These suggestions come in the backdrop of Google imposing new User Choice Billing program from April 26, 2023 under which the developers will have to pay a service fee to Google ranging from 6-26 percent for in-app purchases and subscriptions.
This move by Google is being widely criticized by the startup community who say they are taking undue advantage of their monopoly in the market. The startups believe that this will neither be conducive to innovation ecosystem nor for the growth of the country.
Also Read: How Startups Are Rewriting India's Economic Growth?
It's Startups Vs Google over new in-app billing system
It is in this regard that a group of Indian startups, Alliance of Digital India Foundation (ADIF), has termed Google’s announcement to implement the User Choice Billing system in India as an "abusive dominance practice" by the company. ADIF alleges Google of wiping away 11-26% of revenue earned by Indian Startups, merely as commission without providing any specific service to these Startups.
It has reportedly approached Delhi High Court to keep Google’s implementation of UCB at abeyance until the Competition Commission of India (CCI) hears the complaint.
What is Google’s User Choice Billing System?
In February this year Google announced that it would allow app developers to offer an alternate billing system for in-app purchases within India from April 26, 2023, in a bid to comply with Competition Commission of India’s (CCI's) directives.
As per the new policy, if a user pays through the alternative billing system (also termed as User Choice billing system), the transaction will still be subjected to a service fee, but at a 4 percent rate reduction.
According to the UCB system, the developers will have to pay a service fee to Google ranging from 6-26 percent for in-app purchases and subscriptions, depending on the type of app/service and the annual revenue it generates on Google Play, as compared to the regular 10-30 percent service fee.
Who is ADIF?
ADIF, a New Delhi based policy think tank comprising Indian internet startup companies such as Matrimony, Paytm, MapmyIndia, TrulyMadly and other local entrepreneurs, said on April 5 they have approached CCI to look into Google's user choice billing system 'on an urgent basis'.
Why Does ADIF Object to Google’s UCB system?
ADIF alleges that Google will take 11-26% of revenue earned by Indian Startups, merely as commission without providing any specific service to these Startups. ADIF has requested CCI to look into these “abusive dominance practices of Google” on an urgent basis.
What do the Experts Opine About Google’s UCB?
Saurabh Jain, a Startup Founder cum Head, Strategy & Alliances, ADIF, says Google is using its classic monopoly in the market to exploit the businesses who have no alternate option. Google is wiping away an exorbitant 30% and a service charge of 18% totaling it to approximately 35% from the startups’ revenue in the name of in-app purchases, payment gateway and subscriptions. In addition to this the businesses also have to pay for the google ads.
Google is acting like a new age digital East India Company. Just like it took 200 years for the Indians realize that they have become slaves to Britishers, the Indian public today is not realizing how Google has created dominance in the digital world. There is a dire need to create awareness in the country about the abusive dominance practices of giant company like Google.
When any app is bought through Google, the businesses have to mandatorily pay 30% of the revenue to google. Till now the users had to option for payment gateways of choice. But 26th April onwards, it will be compulsory to use Google’s own payment gateway for which it will charge a draconian rate of 26%. Fintech companies like Paytm or Razorpay charges 2% or less for the transactions. Google has no plans to reduce these charges in the future too. Many countries like South Korea too are fighting against such dic-tats but of no use.
This entire money which Google takes is not even staying in India. Google is a foreign company and they are taking all the money abroad. People just relate Google with Sundar Pichai who has an Indian origin so think Google is as much Indian as Pichai. But its not true.
Google even changes its policy at its whim and fancy and Indians have no say in that. They are so powerful that they are running the entire digital world. They don’t listen to any issues raised by the Indian businesses.
Talking to TICE News, Rajesh Chharia, President of Internet Service Providers Association of India (ISPAI) says, “This was expected because in today’s time nothing is free. The Google or other multinationals are very smart in first creating the market as free and when the market picks up and it becomes the necessity of the user they start charging. Like in the same way twitter is also doing. The startups need to understand that in present time nothing is free.”
Ashish Jain, CEO, The Startup Board tell TICE News, “Google's new User Choice Billing program does not address the high commissions charged by Google. The charges range from 11% to 26% even if opted for an alternative billing system. This is monopolistic behavior and neither conducive to innovation ecosystem nor for the growth of the country. A sizable amount is taken out by a foreign company, for non-commiserate services. It is high time, India has its own alternative OS and app ecosystem. India has the technical capability when ambitious projects such as ONDC, Aadhaar, CoWIN, GST, etc have all been developed within the country.”
Why UCB is like “Colonial Lagaan” for ADIF?
ADIF says that “Unfortunately, there is no quorum at the CCI; and hence Google is taking advantage of an institutional lacunae, bringing in UCB in haste and in the process, hurting start up story and also disregarding the CCI Order.”
Citing case of Twitter Bluetick - it costs Rs 900 on Google Play but only Rs 650 if purchased through the web. This is because of the 30% commission charged by Google on the subscription. Elon Musk has publicly criticized the commissions as a “tax” charged by the app stores, ADIF adds.
Also Read: What Are The Top 10 Startup India Schemes?
ADIF said taking away almost 1/3rd of the revenue would dent the pockets of OTT platforms severely. This would lead to a few of the OTT platforms becoming unsustainable, else remaining platforms increasing the fee for consumers, hurting millions of OTT subscribers for no fault of theirs.
ADIF has alleged Google, for “resorting to these practices despite Competition Commission of India directing Google to mend its ways in a similar case and fined it Rs 937 crore for abusing its dominant position with regard to its Play Store policies This commission is not so different from the colonial ‘Lagaan’ – it is unfair to app developers and to the millions of users who rely on digital applications for their day-to-day activities.”