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Google’s plan to reduce fees on in-app purchases is a ploy to distract attention from its anti-competitive practices: ADIF

Google's decision to lower commissions charged to app developers on in-app sales is a tactic to "deflect and divert" attention from major concerns of developers and startups of fair competition and developer choices in-app economy, said Alliance of Digital India Foundation

Google’s decision to lower commissions charged to app developers on in-app sales is a tactic to “deflect and divert” attention from major concerns of developers and of fair competition and developer choices in-app economy, said Alliance of Digital India Foundation, an industry body that represents a group of Indian digital startups including  Paytm, GOQii, MapMyIndia, Matrimony.com, and TrulyMadly, among others.

Google said it will cut the commission on in-app purchases to 15% from 30% beginning January 1, 2022, in response to mounting developer pressure. Apple and Google have already faced harsh criticism from developers due to their exorbitant 30% app store charges.

“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. Price discovery should be left to the market forces,” said Sijo Kuruvilla George, Executive Director, ADIF

He argued that as long as Google gets to unilaterally dictate prices and people don’t have choices, it’s still a Lagaan – be it 30, 15, or even 2, the percentages do not matter. “Deflect and distract seems to be what’s in play here. The portrayal and grandstanding, as a measure that fully acknowledges and addresses the concerns of developers, is misleading and objectionable,” he said.

Numerous Indian businesses expressed alarm about the hefty charge, while others argued that India requires its own app store to provide consumers with more options.

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

“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. Moreover, apart from the additional work they 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,”  ADIF said.

ADIF explained that 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,” the industry body claimed.

ADIF said that it has maintained that Google must be fair and end the ongoing anti-competitive practices in the name of PlayStore policies. The matter has been challenged, is being studied by CCI, and is awaiting the verdict.

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