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Google's 'Lagaan' Is A Death Knell For Indian Start-Up Ecosystem, Says ADIF

Through a recent blog, Google announced that it is implementing User Choice Billing (UCB) System from April, 26 2023, wherein Google will take 11-26 per cent of revenue earned by Indian Start-ups

Google's 'Lagaan' Is A Death Knell For Indian Start-Up Ecosystem, Says ADIF

Outlook Start-Up Desk

POSTED ON April 05, 2023 2:40 PM

In the latest update, the Alliance of Digital India Foundation (ADIF), an Indian digital start-up policy think tank, a spokesperson has revealed that after Google’s recent blog on implementing the User Choice Billing (UCB) System from April 26, 2023, wherein Google will take 11-26 per cent of the revenue earned by Indian start-ups, ADIF has requested Competition Commission of India (CCI) to look into these abusive dominance practices of Google on an urgent basis.

Unfortunately, there is no quorum at the CCI and hence Google is taking advantage of institutional lacunae, bringing in UCB in haste and in the process, hurting the start-up story and also disregarding the CCI order, the spokesperson continued.

ADIF cited the case of Twitter Blue Tick as it costs Rs 900 on Google Play but only Rs 650 if purchased through the web. This is because of the 30 per cent commission charged by Google on the subscription.

ADIF further continued to talk about the seriousness of the matter and explained the following,

Have consumers ever imagined that for the digital content services they consume through different OTT platforms, Google will be charging 15-30 per cent if consumers are paying through Google Pay, else 11/26 per cent from this month onwards. Taking away almost one-third of the revenue would dent the pockets of OTT platforms severely. This would lead to a few of the OTT platforms becoming unsustainable, else remaining platforms increasing the fee for consumers, hurting millions of OTT subscribers for no fault of theirs.

On similar lines, imagine if the students preparing for entrance exams using digital apps need to shell out extra, burdening parents. This abusive practice would not be limited to OTT platforms or educational apps, but to all use cases having subscription models or in-app purchases including gaming, education, music, video content, fitness, matrimony and dating apps.

Google, a company that has built its reputation on innovation and disruption, is resorting to these practices despite Competition Commission of India directing Google to mend its ways in a similar case and fined it Rs 937 crore for abusing its dominant position with regard to its Play Store policiesThis commission is not so different from the colonial ‘Lagaan’ –it is unfair to app developers and to the millions of users who rely on digital applications for their day-to-day activities. 

This would take away a huge chunk of the revenue made by Indian app developers and start-ups and would render business models of many young start-ups unviable, especially the one relying on in-app purchases, paid apps or subscriptions.

ADIF filed the petition with CCI in October 2021 for interim relief on the Google Play billing system. Its efforts led to Google pushing the policy implementation for mandatory imposition of 15/30 per cent tax to Oct 2022. ADIF assisted in the DG probe by submitting all relevant documents and evidence and finally, CCI in Oct 2022 ordered Google to comply with certain practices which CCI found abusive, including not imposing any price-related unfair, discriminatory and disproportionate conditions. As the matter is pending with NCLAT, ADIF would appeal that the CCI order is complied with by Google in letter and spirit.

But Google has failed to comply with most of the remedies suggested by CCI and its justifications for these are imprecise, non-specific and at best, arbitrary.

This is a serious issue for India's growth story, as it can hamper the country's entrepreneurial zeal and hinder the development of unicorns that are capable of providing global solutions. As Google is choosing the sectors arbitrarily for which these commissions would apply, this literally means that Google would determine the winners and losers in the Indian technology ecosystem. 

The implications of Google's so-called ‘Lagaan’ and other unjust policies on India's economic growth are significant. Innovation and entrepreneurship are critical drivers of the country's economy and restrictions imposed by Google can lead to a stifling of innovation and a lack of competition in the digital economy. Google must take immediate action to rectify these issues and work towards a more fair and competitive digital economy. 

The tech giant's dominance in the Android OS and App Store market has led to a situation where Google is implementing policies unilaterally ad it is almost impossible for app developers to compete, or negotiate with Google's policies as equals. This colonial Lagaan calls for another set of round table conferences, taking cues from Indian history, where Indian App developers may speak their minds as equals for creating a fair and transparent digital ecosystem.  This is not just an issue in India, but it is a global problem. Google's policies have been criticized in other countries as well, and there are ongoing investigations into the company's similar practices.

ADIF spokesperson shared that Indian start-ups are slowly becoming more vocal about such abusive policies and ADIF as a policy think tank would be creating more awareness of these digital challenges plaguing the Indian start-up ecosystem.

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