Explained: Why are app developers, start-ups not impressed with Google's new billing policy?
The new changes in Google Billing Policy doesn't remove the concern of using only Google billing payment system in transactions, thus effectively removing the choice of using alternate payment systems by developers.
Tech giant, Google's announcement of reducing commission on subscriptions on its play store for the developers from 30% to 15%, doesn't address the challenges faced by the developers, start-ups who "will have to compulsorily use Google's Billing System(GBS)" and not other payment gateways/processing systems which charge much lesser commission on every transaction.
Google had faced a global backlash after it announced in September 2020 that the in-app purchases for certain categories including education, OTT, fitness, matrimony, dating and gaming will have to be made only through GBS.
It reduces the commission from 30% to 15% for start-ups/developers with annual revenue of more than $1 million. Under existent policy, 15% commission was charged from the developers from one year onwards.The other payment channels, according to a blogpost by the Alliance of Digital India Foundation (ADIF), including Paytm, BillDesk etc., charge commission as less as 2% from the developers compared to Google's 15% rate.
It adds that GBS was not a preferred mode of payment for a majority of the app developers , who were transacting through alternate payment channels.
However, under the new policy, Google has effectively removed the options of transacting via alternate payment processing systems for the developers and will instead levy 15% subscription charges from them.
On the other hand, Google commands more than 97% market share of operating system in a market like India and will leverage its monopoly to draw commissions from the developers.
ADIF has knocked at the doors of India's competition watchdog, Competition Commission of India (CCI), seeking an investigation into the alleged abuse of dominance in app markets by Google and the concern of mandatory use of its billing system.
An ADIF spokesperson told BusinessToday.in that Google should maintain status quo until the CCI investigation is complete.
"The fact that Google is able to unilaterally declare and dictate prices, as is evident from this announcement as well, lies at the heart of the issue. What developers are asking for is fairness and not benevolence in the form of "reduced" commission percentages. It has never been about the percentages," said Sijo Kuruvilla George, Executive Director, ADIF . He added that the price discovery should be left to the market forces.
"As long as Google gets to unilaterally dictate prices and people don't have choices, it's still a Lagaan - be it 30%, 15% or even 2%, the percentages do not matter. Deflect and distract seems to be what's in play here. The portrayal and grandstanding, as a measure that fully acknowledges and addresses the concerns of developers, is misleading and objectionable," Kuruvilla noted.
Paytm CEO, Vijay Shekhar Sharma was amongst one of the top tech entrepreneurs in India who had voiced concerns on the Google's Billing policy last year, lashing out at the search engine giant for abuse of dominance in the Play Store.
Paytm had also launched its mini app store and roped in key apps across verticals to challenge Google's growing dominance. A Paytm spokesperson refused to comment when asked about the new changes in the Google's Billing Policy.
Homegrown operating system, Indus's CEO and co-founder, Rakesh Deshmukh said this is a good move that is favourable for developers.
"What is interesting to understand here is that these are unidirectional terms that can be altered any day by Google. We have to create an environment where there is true competition to protect developers and users' interests, and the market determines the right commission. Even though it is a good temporary decision it is not going to solve the problem in the long term," Deshmukh noted.
He pointed out that this move shows that Google can work with lower commissions."We witnessed Apple doing the same in Japan. What is the end game? How do these tech giants decide on exempted categories that remain as opaque as their platform policies? Indus App Bazaar understood this challenge early and decided not to charge a commission," Indus CEO stated.
"Innovation is stifled when the developer is charged a commission at the source. We welcome conversations on in-app payments that are being raised globally. A revolution in in-app payments is possible when there is acceptance and availability of alternative distribution to the Google Play Store on the Android platform," Deshmukh added.
Murugavel Janakiraman, Founder and CEO, Matrimony.com described Google's new billing policy as half-hearted since the core issue is not about the percentage charged.
"Forcing developers to remove other gateways and enforcing the use of their own payment system is absolutely unfair. Our fight is purely on the fact that Google is taking away the ability to choose the payment gateway that we want," he stated.
According to Rajiv Bansal, Founder and Ceo of Opoyi (a personalised news platform),this is a continuing and evolving conversation between platforms and developers on how to split the pie of consumer generated revenue.
Regulators are participating in this conversation to create a structure that prevents platforms from abusing their monopolistic power. However, he believes that this may also lead the developers to move from one-time payment to subscription-based structure.
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