Google Vs Indian Startups: A War Against Google's Billing Policy

The entity famous for being the know-it-all in our world, the entity that everyone relies on for both big and small difficulties, has its bad days as well. Google, the search engine handling more than 3.5 billion searches on a daily basis, is everywhere. It doesn't come as a surprise since among the 8.0 billion people on Earth (as per Worldometer), 30% or so are using its assistance multiple times a day. This makes me wonder; if everyone on the planet is turning towards Google for their troubles, then who helps Google find a way out of tough spots? And though difficult to believe, Google is in a tough spot in India. 

Google’s User Billing Policy is facing harsh setbacks in India as it reportedly breaks CCI's set regulations. The Competition Commission of India has already charged Google with a fine of ₹1,337 crore for anti-competitive practices in Android devices which has been further discussed in brief below. Apart from this, Google is also accused of unfairly taking advantage of its dominating position in the tech market with its 30% commission charge. 

So, the know-it-all entity we rely on is hell-bent on converting its God-like standing in the market to green bills with astounding speed. But, to protect the interests of Indian companies, both the government and dedicated committees are planning to take matters into their own hands. This article is about further troubles that await Google across Indian waters as well as the outcome of the antitrust cases it is fighting.

The Might of Google Challenged by India

Various Indian startups have formed a union against Google to abolish its payment system as they found it to be unfairly excessive. Startups like Matrimony.com, Shaadi.com, Unacademy, etc. came together and created the Alliance of Digital India Foundation, also known as Atmanirbhar Digital India Foundation (ADIF). True to its namesake, ADIF envisions making the Indian startup ecosystem the most preferred startup destination for the world by 2030. 

Just think about it, Indian startup companies were so fed up with the continuous rampages that tech giants like Google and Facebook were wreaking in the nation that they formed a unit against it. Why does this feel like a recap of the nation's pre-independence days to me? 😬

But it's not just me who's reminiscing the Lagaan movie dialogues while researching Google's dominance parade in India. ADIF has named its fight against Google's billing policy as the "Lagaan policy" because of the unfair pricing the titan is asking them to pay. 

Let's simplify this with an example of why the startups are so adamant about rejecting this payment system despite it being revamped by Google.   

If you are a developer with a mobile app on the Google Play Store that allows in-app purchases, then a commission of 15% to 30% would have been applied. This means that if a user transaction of ₹100 takes place, then ₹30 would fall under Google's pockets (when a 30% commission is applied). As per Google's Billing Policy, the 15% commission applies to developers who earn up to $1 million in a year, whereas if the developer's revenue crosses the threshold of $1 million, a 30% commission would be applied. 

The commission would be applicable on every transaction for both in-app purchases, subscriptions and paid apps. Hence, the developers distributing their apps on Google Play Store would need to pay 30% of their revenue from Play once it crosses $1 million. This is a big amount for startup companies, ₹8.19 crore, give or take in INR, who are just beginning to find footing in the cutthroat market of India. Whereas it's like a drop of water in the ocean for Google, which recorded an annual revenue of $279.8 billion in 2022 which would be around ₹22893.55 Crore in INR. Talk about going BIG, guys!😮 

As the world is getting more urbanised, Google.com is the most preferred search engine and the most visited website in the world. This directly contributes to the hike Alphabet Inc. owned Google LLC has witnessed. In 2022 itself, Alphabet generated $29.06 billion, making up over 10% of its annual revenue.

The strangest part is that most of the revenue earned by Google comes from their advertising sector, aka the "Google Ads'' program. Remember those “Ads” or “Sponsored” links that always show up first on the search engine? Brands pay for those website links to be displayed on the top to Google to increase their traffic and lead generation. Google charges for these advertised websites, and it contributes around 80% of its total revenue generation. 

Despite these big numbers, Google is stuck on its stance of "take it or leave it" for developers and app providers. Google is the king in the sector, as even Apple can't compete with it. Removal of apps from the Google Play Store would mean losing more than half of the consumers, which the startups and developers can't handle in India.

But, being oppressed is not in these budding companies' nature, so they have decided to keep trying to make Google submit. And with the upcoming changes in India's regulatory policies as well as the nation's future adoption of new policies, there is a high possibility Google may have to make further changes.

The changes have already started after first announcing the application of the User Billing Policy in 2020. Google made changes in its policy due to the resistance it faced in India. But India is not the only nation that has raised flags against Google's tyranny.

Countries with the Same Stance as India

Before the recent upgrade in User Billing Policy, Google made its customers complete all in-app purchases through its in-house platform, Google Pay. Whether a user was paying through credit, debit cards, or any other banking options, every transaction was completed using Google’s payment gateway. Through this, Google cut its 15-30% commission, and the leftover amount was transferred to the respective apps' developers. This in-app purchasing through Google’s payment system was opposed worldwide, including India.

India is not alone in realising the monopoly Google has in the market, especially in the advertising sector. Europe, USA, UK, Australia, Japan, and South Korea have taken a stand by filing several antitrust cases against the search giant. South Korea went as far as updating its Telecommunication Business Act in August 2021, turning monopolies of Google and Apple in the app payment market illegal.

In simple words, the new law, which is also popularly known as “the Anti-Google Law”, restricts these app stores from forcing developers to choose in-app payment systems. Hence, no more commissions are to be guaranteed for the app store companies leading to a vast reduction in the revenue generated from this sector. 

Apart from South Korea, regulatory bodies from other countries have filed several cases, including the DOJ Lawsuit, aka the United States Department of Justice lawsuit, the Shopping Comparison case in Europe, the Antitrust Scrutiny against Google in Japan, and many others. All these cases revolve around the tech titan's wish to monopolise its advertising and search services on Android devices. Many of these cases are still ongoing, but their outcome might not be in Google's favour.  

After seeing such backlash worldwide, Google finally realised the gravity of the matter and decided to settle some tension by changing its User Billing Policy. The original User Billing Policy was enacted on the prior set date of 26th April 2023. Still, instead of forcing app developers and providers to pay the 15-30% commission on in-app purchases, Google had to make certain tweaks. Let’s see what changes were made in the billing policy and whether they pacified the regulatory bodies and developers in India.  

Changes in Google’s Billing Policy

After India fined Google for antitrust violations and CCI started investigating the matter presented by ADIF, Google had no option other than to rework its conditions. So, as of February 2023, Google started providing an alternative billing system alongside its in-house payment system to consumers in India. Along with this, additional alterations were made to the payment policy. By going through Google’s official website, I have noted the prime changes in the in-app payment system.

Change: Indian users will now have the option to choose their default search engine via a choice screen that will soon start to appear when a user sets up a new Android smartphone or tablet in India.

Explanation: Google's search engine was the default feature in most Android devices. This showcased the tech titan's strategy of making its search app a requirement in Android devices. Thus, Google was forcing the device makers and limiting consumers' usability options. After antitrust cases were filed against the company in several nations, Google had no other choice but to add a user-choice feature to devices. 

Change: User-choice billing will be available to all apps and games starting next month. Through user choice billing, developers can offer users the option to choose an alternative billing system alongside Google Play’s billing system when purchasing in-app digital content.

Explanation: As mentioned above, Google enforced its billing system as the only payment option for in-app purchases. But, after this condition was openly opposed by startups in India as well as being outlawed by South Korea, Google had to provide optionality to developers and consumers in its play store. 

Change: Original Equipment Manufacturers (OEMs) will be able to license individual Google apps for pre-installation on their devices.

Explanation: There are hardly any Android smartphones present in our nation that don't have Google features and apps pre-installed. Whether it is Google Maps, Google Play Store, Google Mail, or Google Chrome, android phones contain them without an option to uninstall them. It was a great strategy for the company to reduce or, should I boldly say, remove competition altogether.

By seeing the above infographic for GMail's market share in terms of client preference, you can understand the dominance Google apps enjoy in the market. 

Further Trouble for Tech Giants in India

So, based on the above changes, Google launched its billing system in India. Despite that, first startups and now OTT platforms like Disney+, Hotstar, Voot, Zee5, SonyLIV, Manorama Max, SunNXT, and Discovery+ are not convinced. These platforms believe the slight reduction (4% to be exact) to be a half-assed method to appease the allegations made against Google. Startups find these reductions to be no better than the original commission rate of 15-30% and are thus not ready to accept it.

But, even if Google somehow got away from the sharp eyes of CCI, its troubles in India are far from over. The Indian government plans to introduce certain regulations to the data protection department, many of which are already in the last phase. Digital India Act, Data Competition Bill, and Digital Personal Data Protection Bill are some policies and bills being planned by MeitY and the Finance Ministry of India. These policies would restrict the free reigns and supremacy tech giants like Google, Meta, and Apple enjoy in the country.

Already, the first draft of the Digital India Act has made its public appearance this year, and the other bills are not too far behind. Through these updates in the regulations, the Indian government is adamant about protecting its citizens’ rights and helping startups and other Indian companies to thrive within legal bounds.

With these bills coming into effect, Google and Meta, along with other foreign-based companies, will have to bring many changes in their business models. FDI policies are working as a sound screener for foreign investments in the nation. With the addition of a properly drafted data protection regime, all monopolies and unfair advantages will be weeded out. 

The Bottom Line

At Google, we have been privileged to play a part in India’s embrace of technology to improve lives in three key ways: bringing access to affordable devices, building helpful and secure products to meet the evolving needs of Indian users, and partnering with India's vibrant developer community to grow and reach a global audience.

This is the first line of the blog post introducing the User Billing Policy by Google. Talk about hypocrisy! Google has been misusing its position of being at the top of the sector for its advantage for a long time now, and it's time that it stops. However, charging the company with a few million dollars won't be enough, as was apparent from prior examples around the globe. India may have to take a potent stand for its startup benefits, just like South Korea did. The upcoming policies need to incorporate details from different angles to avoid leaving loopholes for the giants to misuse. Let's hope that foundations like ADIF will be able to accomplish their goals and are not only present for fortnightly updates.