Google vs Indian startups row: its global implications
The fundamental reason for Google suspending Indian apps was the non-payment of its Play Store “service fee"—a charge that Google levies on apps that earn through subscriptions. At the moment, this fee ranges from 11% to 30%. Startups, including Bharat Matrimony and Shaadi.com, have refused to pay up.
Since Indian startups also failed to win an injunction against this fee in an appeal against Google at the Supreme Court, the American tech major has decided to suspend over 10 Indian apps with over 100 million cumulative downloads. At the same time, it has restored the apps that paid the fee. Founders of all major suspended apps told Mint that Play Store is their primary discovery platform.
It thus contributes to most of their revenue, and this suspension could reduce their earnings by half. The founders also said that they spend heavily to rank in Google’s search, too. Therefore, adding the service fee to it means Google could get as much as 80% of the revenue earned by these Indian startups.
This would make their businesses unviable. Startups won’t need to pay any service fee if they accept payments outside of their app but startups say this process disrupts their user experience. The competition commission is reviewing Google’s compliance of its 2022 order on alleged anti-competitive practices, and a report on this could be published soon.
The Supreme Court is expected to hear this matter and IT minister Ashwini Vaishnaw has stepped in. So, a resolution is expected either way. Google has temporarily restored the apps.
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