Startups Challenging Google's Monopoly: Decoding the Controversy

In the evolving landscape of India's digital arena, a fierce battle is underway between tech giant Google and burgeoning startups. Alliance of Digital India Foundation (ADIF) has emerged as a stalwart defender of startups in this battle.

Snehil Khanor, Founding Member of ADIF and Co-founder &CEO of TrulyMadly

TICE News had an exclusive conversation with the an expert from ADIF to delve into the intricacies of the Google-Startup App War, spotlighting the legal disputes, the role of the ADIF, and the challenges faced by startups. 

As the clash of titans continues, we explore the impact on the Indian digital ecosystem and ADIF's relentless pursuit of a fair and competitive playing field for startups.

The Legal Battle Unravelled

Amidst the complexity of the Indian digital scene, let’s unfold the gripping saga between—the Google-Startup App. At its core is a legal tussle challenging Google's alleged abuse of dominance, as recognized by the Competition Commission of India (CCI). The landmark "Google Android Judgment" and "Google Play Store Judgment" brought to light anti-competitive practices that sent shockwaves through the tech industry.

In a major development last week, Google opted to withdraw its appeal against an order from the Delhi High Court, instructing the CCI to investigate grievances raised by several Indian startups regarding Google’s user choice billing (UCB) system.

The spokesperson from ADIF sheds light on the ongoing legal skirmish, revealing, "Google appealed the CCI's decision, but the NCLAT upheld it. The case now awaits its fate in the Supreme Court, with a pivotal hearing anticipated in January 2024."

Despite Google's attempts to appease concerns with concessions, the digital ecosystem remains wary.

ADIF's Vigilant Stance

Amidst this legal battle between the tech giant and startups, ADIF stands as a beacon for app developers, actively filing complaints and raising pertinent issues. The discontent in the Indian digital realm has extended beyond the CCI, with startups independently challenging Google in the Madras High Court. Notably, interim relief has been granted to app developers, underscoring the dissatisfaction with Google's practices.

Task Force for Startup Empowerment

To fortify the fight against Google's perceived monopolistic grip, ADIF established a Task Force. "Our aim is to tackle critical challenges hindering Indian startups' growth," states the ADIF spokesperson.

The Task Force was born out of a previous case against Google's mandatory GPBS, showcasing ADIF's commitment to fair practices. Actively participating in hearings and appeals, ADIF also served as an Impleader in the "Google Android Judgment" case.

Beyond legal battles, ADIF submitted representations to the Parliamentary Standing Committee on Finance, addressing the anti-competitive practices of Big Tech. This engagement led to ADIF deposing before the Committee, providing a direct platform to voice startup concerns to policymakers.

Dismantling the App Store Monopoly

One of the core issues at the heart of the Google-Startup App War is Google's monopoly in terms of In-App stores.

The ADIF spokesperson explains their strategy: "We're challenging Google's app store monopoly and high charges through a multi-pronged approach."

ADIF has filed an application with the CCI, exposing potentially deceptive practices related to User Choice Billing and the Consumption Model.

Advocating for startups' unconditional use of third-party payment processors, ADIF remains resolute. If Google doesn't reduce charges, ADIF is prepared to actively support alternative platforms. The goal is clear—to foster competition and innovation, providing startups with choices beyond Google's monopoly. ADIF aims to create a competitive digital ecosystem that benefits startups and consumers alike.

What is Google’s User Choice Billing System?

In February this year, Google announced that it would allow app developers to offer an alternate billing system for in-app purchases within India from April 26, 2023, in a bid to comply with Competition Commission of India’s (CCI's) directives.

As per the new policy, if a user pays through the alternative billing system (also termed as User Choice billing system), the transaction will still be subjected to a service fee, but at a 4 percent rate reduction. 

According to the UCB system, the developers will have to pay a service fee to Google ranging from 6-26 percent for in-app purchases and subscriptions, depending on the type of app/service and the annual revenue it generates on Google Play, as compared to the regular 10-30 percent service fee.

"The case is ongoing before the Competition Commission of India (CCI). The matter is still being examined by the CCI on its merits and we are confident that the CCI will uphold the interests of the Indian startup ecosystem. Google had challenged the Delhi High Court order which directed the CCI to hear the complaints of the startups who alleged that Google's new User Choice Billing (UCB) policy violated the CCI order dated 25th October 2021. The CCI order had clearly stated that Google shall not impose any restrictions on app developers from using any third-party billing or payment processing services. However, UCB is again a big restriction that limits the choice and freedom of the app developers and the users.

We believe that UCB is an unfair and anti-competitive practice that harms the innovation and growth of the Indian digital sector. We urge Google to respect the CCI order and the High Court order and refrain from imposing UCB on the Indian app developers," Snehil Khanor, Founding Member of ADIF and Co-founder &CEO of TrulyMadly told TICE News.

Why Does ADIF Object to Google’s UCB system?

ADIF alleges that Google will take 11-26% of revenue earned by Indian Startups, merely as commission without providing any specific service to these Startups. 

Overcoming the Giant's Shadow

Despite the David-and-Goliath dynamics, ADIF acknowledges the uphill battle of challenging Google's dominance.

"We actively promote strategies for a more competitive digital landscape," says the spokesperson. With limited alternatives, ADIF advocates for healthy competition by supporting alternative platforms and investing in local innovation.

Collaborative efforts among startups are seen as a means to reduce dependence on a single player like Google. ADIF engages with regulators for tailored laws that address challenges posed by dominant platforms. Industry alliances empower startups to negotiate better terms collectively, with ADIF serving as a platform for startups to unite, ensuring their collective voice is heard and their interests are protected in the evolving digital space.

The "Chokehold" on Indian Startups

In addressing why Google chokes Indian startups, the spokesperson paints a concerning picture: "Google's actions raise concerns about their impact on the digital ecosystem and startups."

With dominance in areas like the Android OS and app market, Google holds an unfair advantage that hampers healthy competition. Imposing conditions that hinder the growth of Indian startups competing in the app market adds another layer of complexity.

Moreover, Google's expansion into new markets disrupts startups in those sectors, creating an uneven playing field. The overarching impact of Google's behavior poses significant challenges to the growth and success of Indian startups. As the legal battle rages on, ADIF remains steadfast in its commitment to fostering a fair and competitive digital landscape for startups in India.

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