Decoding the Google-Startup Clash: Billing Wars Explained

The National Company Law Appellate Tribunal (NCLAT) has called upon tech behemoth Google and the Competition Commission of India (CCI) to address concerns raised by Indian startups and other entities regarding Google's user choice billing (UCB) policy. 

The tribunal has deliberated on the matter, directing all involved parties to furnish their responses and counter-arguments before reconvening on May 24, 2024.

Denied Interim Protection

During the latest hearing last week  companies petitioned NCLAT to instruct Google to suspend service fees until the next hearing. However, the tribunal declined to grant interim protection.

Among the petitioners are Mebigo Labs Pvt Ltd, the company behind Kuku FM, and Shaadi.com, alongside the Indian Broadcasting and Digital Foundation (IBDF) and the Indian Digital Media Industry Foundation (IDMTIF). These entities have been advocating for relief from Google's service fees until the CCI concludes its investigation into the company's billing policy.

CCI's Ongoing Investigation

The CCI initiated an investigation on March 15, 2024, citing potential violations of the Competition Act by Google. The probe, with a 60-day deadline, focuses on whether Google's unified codebase constitutes an abuse of its dominant market position.

Challengers of Google's policy argue that its service fees, ranging from 11% to 26%, are exorbitant, disproportionate, and discriminatory. They claim these fees result in significant losses and hinder app developers' market access. Furthermore, they criticize Google for charging fees to only a subset of developers while providing equal services to all apps.

The conflict between Google and app developers has a longstanding history. Recent clashes resulted in the removal and subsequent restoration, after intervention by Union Minister Ashwini Vaishnav, of apps like Bharat Matrimony and Shaadi.com from the Play Store, highlighting the ongoing tensions.

Legal Wrangling

NCLAT's involvement in this case coincides with Google's appeal against a hefty fine imposed by the CCI in 2022. Google contests the penalty, arguing against allegations of market distortion and anti-competitive behavior.

Google's legal team asserts that CCI's concerns lack substantial evidence and fail to establish Google's policies as anti-competitive. They maintain that Google Play Billing System (GPBS) does not impede other payment processors from operating in the Indian market.

In response to CCI's claims of market denial, Google contends that the regulatory body hasn't sufficiently defined the market in question. Additionally, Google defends its preference for its UPI app, GPay, citing compliance with the National Payments Corporation of India's guidelines.

The ongoing legal battle underscores the complex relationship between tech giants and smaller players in India's digital ecosystem, with NCLAT poised to adjudicate on critical issues concerning market dynamics and competition regulation.

History Behind Startups Vs Google: The Battle Over Billing

In recent days, Indian app developers have been fervently protesting against Google's billing policies, citing potential detrimental effects on their revenue streams.

On Friday, Google took the drastic step of delisting apps such as Shaadi.com and BharatMatrimony.com due to their failure to comply with the tech giant's billing policies. However, come Monday, these apps reappeared on the Google Play Store, albeit stripped of their in-app payment options.

The founders of these apps assert that Google, leveraging its near-monopoly in the app publishing sphere, is compelling startups to shell out exorbitant fees for their services.

But what exactly is fueling the discontent among these startups against Google's billing policies?

What's the Case?

For quite some time now, Indian app developers have been vocally expressing their concerns regarding Google's billing policies, citing potential significant revenue setbacks.

Google took action against apps like Shaadi.com and BharatMatrimony.com, delisting them from the Play Store due to non-compliance with the tech giant's billing policies. However, by Monday, these apps made a reappearance on the Google Play Store, albeit without their in-app payment options.

What is Google’s Billing Policy?

What is required for app publishers using Google Play Store?

Any app publisher selling services, digital content, or goods to users via the Google Play Store must use Google's billing system for transactions. This policy applies to startups offering various services like education, gaming, dating, and matrimonial services.

Are there exceptions to this policy?

Yes, apps selling physical goods like e-commerce, or those related to bill payment or banking, are exempt from using Google Billing.

What is the Problem?

Why are some startup founders criticizing Google?

Startup founders impacted by Google's billing policy have criticized the company for what they see as exorbitantly high rates. They compare Google to a shopping mall landlord charging merchants for using its space.

What specific issue are Indian startups raising?

Indian startups question the rationale behind Google's fees, especially since the government subsidizes digital payments made through UPI and RuPay debit cards.

What Does Google Charge?

How much does Google charge for transactions?

Google charges between 15% and 30% for transactions on apps downloaded via the Play Store. This contrasts with other payment aggregators, which charge almost zero to 4%.

Is there any flexibility in Google's pricing?

Google introduced a tiered payment program, where smaller players can pay less than 15%. For larger earnings, the charge is 30%.

Google’s Billing Scheme

How does Google's payment structure work?

Google offers three tiers of payments for app publishers, including a 15% service fee for the first $1 million worth of services sold annually. For earnings exceeding $1 million, the charge increases to 30%. Subscription products are charged a flat 15%.

Role of Other App Stores

How are startups responding to Google's rates?

Some Indian startups are exploring the development of their own app stores. However, given India's predominance as an Android market and the security features promised by Google, the Play Store remains the most popular platform.

March 2024 Events

What recent developments have occurred regarding Google's billing policy?

Google restored all delisted apps after 10 companies removed payment features, making their apps consumption-only. This move may confuse users and potentially impact conversions, affecting startups' operations.

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