Apps like Shaadi.com and BharatMatrimony.com were delisted by Google on Friday since they did not adhere to the tech giant’s billing policies. By Monday, these apps were restored on Google Play Store, but without their in-app payment options.
Founders of these apps say that Google is using its near monopoly in the app publishing business to coerce startups to pay exorbitant fees for their services.
But why is it that a bunch of startups are up in arms against Google’s billing policies? ET explains.
What is Google’s Billing Policy?
To be able to use Google Play Store‘s distribution, any app publisher who is selling services, digital content or goods to its users must use the app marketplace’s billing system to process those transactions. The policy is applicable for startups offering services like education, gaming, dating, matrimonial and such. If the app sells physical goods like ecommerce, or is a bill payment or banking app, they are exempt from mandatorily using Google Billing.
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What is the problem here?Think of the app store like a shopping mall and Google is the landlord who charges merchants selling services in the mall. While this seems like a legitimate demand, Indian startup founders impacted by the move have mostly criticised Google for charging “exorbitantly high” rates.
Especially at a time when the Union government subsidises digital payments in the country made via UPI and RuPay debit cards, large digital merchants are questioning the rationale behind Google’s fees.
What does Google charge?
For every transaction on the app that has been downloaded via Play Store, the merchant needs to pay between 15% and 30% to Google, according to industry insiders. If that same merchant uses any other Reserve Bank-recognised payment aggregator like a Razorpay or Cashfree, the charge is almost zero to 4%, depending on the payment instrument the customer uses.
To justify the charges, Google in a blog post on March 1 said it has a tiered payment programme which allows smaller players to pay much less than 15%. It said 200,000 app developers adhere to Google’s billing system, only 10 apps which had been delisted on Friday have taken the matter to court.
Google’s billing scheme: Google offers three tiers of payments for app publishers.
15% service fee: From July 2021, Google started charging a 15% service fee for the first $1 million worth of services sold by any publisher in a year. For earnings in excess of $1 million, the charge is 30%.
For subscription products, the charge is 15% flat. It is not dependent on the revenue of the publisher.
If an app qualifies for Google’s Play Media Experience programme, then the charges will be 15% or lower. There are multiple conditions that need to be fulfilled by an app to qualify for this programme.
Role of other app stores: Given the high rates that Google charges, many Indian startups have spoken about building their own app stores. PhonePe recently launched its own Indus Appstore. The government also runs its own app store to promote apps which are linked to administration and other such services.
Device manufacturers, like Samsung and Xiaomi have their app stores as well. But given that India is an Android market and Google promises many additional security features for apps published on its platform, it remains the most popular platform by miles.
Current status: Google has restored all the apps that it had delisted on Friday. This happened only after the apps of 10 companies that were removed have taken away all payment features from their apps and become consumption only. This way they can avoid Google Billing.
Consumers will be redirected to their websites for any purchases. But industry insiders say this move will create confusion among users and also could impact conversions, thereby affecting their
Industry demand: The Payments Council of India, which represents all the major payment companies in the country, said the government should enact a law preventing someone like Google charging such exorbitant fees on app developers. Vishwas Patel, chairman of the council, told ET that the government should take the cue from South Korea which made legal amendments to prevent Google from implementing such policies.