Mint Explainer: Who’s winning the app war – Google or Indian startups?
Mint explains where things stand in India, and what the immediate future holds. It’s a charge that Google levies on companies that sell services through apps listed on its Play Store. Under the current rules, apps that earn up to $1 million from subscriptions or in-app purchases are charged 15% of the revenue as service fee, and those that earn more than that are charged 30%.
After global litigation pushed Google to also offer third-party billing services, it offered a 4% reduction in service fees for those using these. This means companies that don’t use Google’s own billing system pay 11% or 26% of their app revenue to the tech major. In notices sent to more than 10 Indian startups, Google said it was enforcing a rule under which entities that did not pay the service fee would not be listed on the Play Store.
It said more than 200,000 apps from India were not paying a service fee. In a blog post, it said nearly 97% of all apps on the Play Store do not pay a fee, and that a majority of the rest pay 15%. “For years, no court or regulator has denied Google Play’s right to charge for the value and services we provide.
On 9 February, the Supreme Court also refused to interfere with our right to do so. While some of the developers that were refused interim protection have started fairly participating in our business model and ecosystem, others choose to find ways to not do so," Google wrote in the blog post on Friday. It also highlighted a ‘consumption model’ in its blog post, saying startups that do not intend to pay the fee will have to remove payment options from their mobile apps and use browsers to accept subscriptions from users instead.
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