Google to start supporting third-party payment systems for app developers in India, with a twist

Google announced on Thursday that all developers in India can now use alternate payment ways to bill customers for apps and services sold on the company’s app store. The decision comes nearly a month after the company released a list of policy changes on 25 January, including permitting third-party app store purchases on the Play Store.

A massive change thanks to the CCI
“In response to recent legislative changes in India, we are now giving all developers the ability to give an alternative payment system alongside Google Play’s for their mobile and tablet customers in India. The Google Play service charge will be lowered by 4 per cent if a user pays using an alternative billing system,” according to an update to the company’s official Play Console Help support website.

Google currently charges developers a 15 per cent or 30 per cent commission for using its platform and payment tools, based on their yearly Play Store income. With this update, developers who use third-party payment services, such as any alternate payment gateway for paid apps, services, and subscriptions, will receive a 4 per cent commission discount — though they will still be obligated to pay Google 11 per cent or 26 per cent commission, depending on how much they earn from their apps.

The update comes after the Competition Commission (CCI) penalised Google a total of Rs 2,273 crore (approximately $275 million) in October last year for abusive market supremacy and anti-competitive behaviour. Google has since submitted an appeal against the CCI decision with the National Companies Law Appellate Tribunal (NCLAT), with proceedings currently underway.

To be fair, Google launched a test initiative with select developers in September last year to enable third-party billing. As part of its policy adjustments, the business announced on January 25 that it will enable third-party payments for all developers in the nation.

App developers and studios not happy with Google
Startups and developers, on the other hand, have alleged that Google’s response is not in accordance to the CCI’s directives. According to a statement released by the industry body Alliance of Digital India Foundation or ADIF on the subject, the update is “a clear violation of the specific directions issued by the CCI.”

“Despite not using any Google services, app makers will be compelled to pay commissions. This is clearly a breach… Google shall not place on app developers any conditions, including pricing conditions, that are unjust, unreasonable, discriminating, or disproportionate to the services given to the app developers. Furthermore, there is no explanation as to why Google will charge 11 per cent or 26 per cent commissions even if the customer uses a third-party handling service. This is made more difficult by the fact that the majority of purchases in the app digital environment do not use the Google Play Billing System,” read the statement from ADIF.

in light of the CCI decision and how Google has responded to it, entrepreneurs are likely to step up their battle against Google’s Play Store fees. Rameesh Kailasam, president and chief executive of industry group IndiaTech said at the time that the commission levied by Google “may kill the startup environment, and drive them out of the app economy.”

“This can be seen as a flagrant misuse of operating system market supremacy, since the normal use of a payment processor interface for any online transaction is ideally around 1-3%. As a result of the CCI ruling, this commission rate is likely to be contested by newcomers,” he went on to say.

What does the law say, is Google right?
Lawyers cautioned, however, that Google was not in direct violation of CCI’s ruling because the latter is not a market price supervisor.

“When a consumer decides to use an alternative billing method, the normal service charge the developer pays will be lowered by 4 per cent. Google Play’s utility charge has never been merely a money processing fee. It represents the worth of Android and Google Play, as well as all of the developer services we provide, such as app delivery and discovery, the shopping platform, developer tools, statistics, training, and more,” said a Google representative.

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