Play Store policy breaches to face action

The announcement follows the controversy over its Play Store policies which led to the Competition Commission of India (CCI) directing the tech behemoth to allow third-party payment systems for apps on the Play Store.

Google complied with CCI’s direction, allowing developers to start using third-party payment tools for subscription as well as in-app payments. However, it had set a 6 April deadline for developers to comply with the rules after CCI’s decision. It had also appealed the CCI’s ruling at the National Company Law Appellate Tribunal, which was rejected.

On Wednesday, Google said in a blog post that it will start “reaching out” to developers who have not compiled with its Play Billing policies.

Currently, Google charges developers a 15% service fee for apps earning less than $1 million a year, and 30% for those earning more. In its blog, Google said only about 60 of the 200,000-plus developers who use Play Store qualify for the 30% fee. Besides, it charges 11% and 26% respectively, discount of 4%, for apps choosing to use third-party billing systems.

“Most developers globally have elected one of the routes. In India, now that the deadline has passed, we are informing developers who have not yet implemented one of these options that we will be taking steps to ensure our policy is applied fairly. We continue to comply with the local laws and cooperate with local proceedings, as applicable.”

Google Inc. provides three mechanisms to facilitate billing on its platform: its proprietary transaction system, user-choice billing via third-party payment systems, and a consumption-only option which allows users to “login when the app opens and access content paid for somewhere else”.

Potential sanctions against non-compliant developers could range from halting app updates to outright removal from the Play Store. Android apps disseminated via the Play Store leverage Google’s systems for over-the-air updates, offering new features and bug fixes to users. Google has cited payment processing, updates, and security as core services it offers on Play Store, to justify the fees charged to developers.

However, Google Play Billing policy has faced stiff resistance in India, especially from major startups like PayTM and Bharat Matrimony, alongside others, that have categorically opposed it. In a 10 April filing with the CCI, industry body, Alliance of Digital India Foundation (ADIF) had opposed the billing system, despite the CCI in October penalizing Google $112 million for it and directing it to allow third-party tools.

ADIF counts PayTM, Matrimony.com, TrulyMadly, MapMyIndia and Goqii among its members. “Google is blatantly violating the 25 October 2022 CCI order and on 12 May CCI said that an inquiry needs to be made into whether its is complying with the order,” said an ADIF spokesperson.

“However, Google in blatant violation is representing factually incorrect information that Google is compliant with the order and its User Choice Billing policy is also fully compliant. As the matter is still sub-judice, Google mandating App developers to either comply with their policies or will face actions, including deletion from Play Store, is clear case of abuse of dominance. The Indian Startups need to come together, before Google Lagaan becomes pervasive to all App developers offering physical and digital goods,” .

Rameesh Kailasam, CEO of IndiaTech.org, another industry body representing tech startups in India, argued that Google already earns revenues from developers through other services it provides for building apps on Android. “The way this whole payment process has been structured seems to give a wrong perception that payment providers are free to charge whatever prices they want. This also means that there is a need for the Finance Ministry and RBI to intervene and clarify this position. These stores already have different streams of revenue emanating out of various services, right from mere listing to embedded services from their environment,” he said.

“The fact that such revenues are being further extracted out as a significant percentage of consumer payments makes it clear that these are payments only. The damaging effect of this will hurt the Indian startup ecosystem in a major way. It is important for both the government and RBI to intervene here like it has happened in other emerging tech jurisdictions,” he added.

To be sure, the continued battle against policies enforced by Big Tech firms has also led to unrest within the industry. Multiple startup founders have claimed that the Internet and Mobile Association of India (IAMAI), is biased towards the wants and needs of Big Tech firms over startups, and are vying for “greater representation” in the body in its upcoming elections.

The IAMAI, which is one of the oldest industry bodies in India, is headed by Sanjay Gupta, the Country Head for Google India, as Chairman. Shivnath Thukral, Public Policy Director of WhatsApp, which is owned by Meta, is its Vice-Chairman. Payments unicorn Razorpay’s founder Harshil Mathur serves as its Treasurer.

Most founders have argued that Google’s fees are too steep for Indian developers, and have said that the company should do away with them altogether. In 2020, the battle even led PayTM to announce its own in-app app store, for which the company said it wouldn’t charge any fees from developers.