Google's 'Lagaan': A death knell for Indian Statup Ecosystem
Responding to Google’s recent blog on implementing User Choice Billing (UCB) System from April, 26 2023, wherein Google will take 11-26% of revenue earned by Indian Startups, merely as commission without providing any specific service to these Startups, ADIF (Alliance of Digital India Foundation), an Indian Digital Startup policy thinktank has requested CCI (Competition Commission of India) to look into these abusive dominance practices of Google on an urgent basis.
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 INR 900 on Google Play but only INR 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.
Have consumers ever imagined that for the digital content services they consume through different OTT platforms, Google will be charging 15-30% if consumers are paying through Google Pay, else 11/26% from this month onwards. 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.
On similar lines, imagine if the students preparing for entrance exams using Digital apps need to shell out extra, burdening parents. This abusive practice would not be limited to OTT platforms or educational app, but to all use cases having subscription model or in-app purchases including Gaming, Education, Music, Video content, fitness, matrimony and dating apps.
Google, a company that has built its reputation on innovation and disruption, is resorting to these practices despite Competition Commission of India directing Google to mend its ways in a similar case and fined it INR 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.
This would take away a huge chunk of the revenue made by Indian app developers and startups and would render business models of many young startups unviable, especially the one relying on in-app purchases, paid apps or subscriptions
ADIF is leading this lone battle from 2021, when it first filed the petition with CCI in Oct 2021 for an interim relief on Google play billing system. Its efforts led to Google pushing the policy implementation for mandatory imposition of 15/30% tax to Oct 2022. ADIF assisted in the DG probe by submitting all relevant documents and evidences, and finally CCI in Oct 2022 ordered Google to comply on certain practices which CCI found abusive, including not to impose any price related unfair, discriminatory and disproportionate condition. As the matter is pending with NCLAT, ADIF would appeal that the CCI order is complied by Google in letter and spirit.
But Google has failed to comply with most of the remedies suggested by CCI, and its justifications for these are imprecise, non-specific, and at best, arbitrary.
This is a serious issue for India's growth-story, as it can hamper the country's entrepreneurial zeal and hinder the development of unicorns that are capable of providing global solutions. As Google is choosing the sectors arbitrarily for which these commissions would apply, this literally means that Google would determine the winners and losers in the Indian technology ecosystem.
The implications of Google's ‘Lagaan’ and other unjust policies on India's economic growth are significant. Innovation and entrepreneurship are critical drivers of the country's economy, and restrictions imposed by Google can lead to a stifling of innovation and a lack of competition in the digital economy. Google must take immediate action to rectify these issues and work towards a more fair and competitive digital economy.
The tech giant's dominance in the Android OS and App Store market has led to a situation where Google is implementing policies unilaterally ad it is almost impossible for app developers to compete, or negotiate with Google's policies as equals. This colonial lagaan calls for another set of round table conferences, taking cues from the Indian history, where Indian App developers may speak their minds as equals for creating a fair and transparent digital ecosystem. This is not just an issue in India, but it is a global problem. Google's policies have been criticized in other countries as well, and there are ongoing investigations into the company's similar practices.
ADIF spokesperson shared that Indian Startups are slowly becoming more vocal about such abusive policies and ADIF as a policy thinktank would be creating more awareness on these digital challenges plaguing the Indian Startup ecosystem
Google Abusive Practices
Google is disregarding the CCI orders
Google unilaterally seeking upto 30% commission owing to its abusive dominance in OS & App store market, is tantamount to it charging ‘Feudal lagaan’
Google is deciding which startup sectors would this lagaan would apply
This indirectly means, google would decide ‘Winners & Losers’ in Indian tech ecosystem
Articles related to the same have been published in renowned publication houses. Some of the links of e-articles and cutouts of articles in print media can be found below.
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