Google’s commission cut a distraction tactic, says ADIF

The Alliance of Digital India Foundation (ADIF), a grouping of Indian digital startups, said Google’s move to reduce commissions charged to app developers on in-app purchases is a tactic to “deflect and distract”, and the group will continue its efforts to protect fair competition and developer choices.

On Thursday, Google slashed the commission for in-app purchases to 15% effective January 1 under mounting pressure from developers in India, its largest market in terms of user base, who have asked the company to allow other payment mechanisms for purchases by customers.

“The fact that Google is able to unilaterally declare and dictate prices, as is evident from this announcement as well, lies at the heart of the issue. What developers are asking for is fairness and not benevolence in the form of “reduced” commission percentages. It has never been about the percentages,” said Sijo Kuruvilla George, executive director, ADIF.

He added that price discovery should be left to the market forces and as long as Google gets to unilaterally dictate prices and people don’t have choices, it’s still a ‘Lagaan’ (tax) – be it 30, 15 or even 2, the percentages do not matter.

Google had said last year that developers would have to pay a flat 30% commission on all in-app purchases but deferred its implementation to April 2022 following protests by Indian startups. Startups believe the company’s move to enforce a 30% commission was an abuse of its app store’s dominant position in India and would come in the way of building sustainable businesses. Earlier in the month, ADIF filed a petition before India’s antitrust regulator seeking interim relief against US-based tech giant Google’s new Play Store policy. Competition Commission of India (CCI) is investigating Google for alleged abuse of market dominance of its app store, the Android operating system, its billing policy.

ADIF said Google’s announcement might come as a source of happiness for the subset of developers who are already on the Google billing system as the cut will improve their margins – should they fall into the “right” categories that the company deemed fit for Google’s relaxation in margins.

ADIF said the announcement does nothing to address the issues and challenges of scores of developers who stand to be affected by the earlier announcement by Google of forced adoption of their billing system by March 2022.

It claimed that apart from the additional work developers would have to undertake, both with integration and re-onboarding of customers, almost all of them would see their margins get thinner owing to migrating to a much higher commission rate (30%/15%) from the present rates (1%-2%) being levied by their existing payment providers.

“The differential pricing system that Google is attempting to implement with this announcement is also unfair and arbitrary. As per the announced policy, different categories of apps would attract different tariffs while being provided exactly the same level of service. Moreover, such pricing structures would further distort market forces to the detriment of all,” it stated.