Google defers Indian in-app fees after angry startups complain

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FILE PHOTO: A man walks past the sign of "Google for India", the company's annual technology event in New Delhi

By Aditya Kalra and Nivedita Bhattacharjee

NEW DELHI/BENGALURU (Reuters) – Alphabet Inc’s Google has extended its deadline for Indian app developers to comply with a new billing system for commission fees by six months, it said on Monday, days after local startups voiced anger about the charges.

Google will now enforce its global policy more strictly and charge a 30% commission fee for in-app purchases from Indian developers from March 31, 2022, the company said, saying it was “being mindful of local needs and concerns”.

The move comes after many startups in India banded together to consider ways to challenge the company by lodging complaints with the government and courts over the original deadline for compliance of Sept. 30 next year.

They were upset about the commission fee and also criticised several other Google Play Store policies for hurting their businesses.

“We do not succeed unless our partners succeed,” Google said in a blog post, adding that it will set up “listening sessions” with leading Indian startups to understand their issues.

Last week, Google fixed the enforcement date for the new billing system at Sept. 30, 2021 and said only 3% of apps globally were non-compliant.

The dispute started after Google briefly took down India’s top digital payments app Paytm for violation of certain Play Store policies last month, drawing sharp rebukes from the Softbank-backed Indian company’s founder, Vijay Shekhar Sharma, and several other entrepreneurs.

Nearly 99% of India’s half a billion smartphones run on Google’s Android mobile operating system. Some Indian startups say that allows Google to exert excessive control over the types of apps and other services they can offer, an allegation the company denies.

“A deferment (of the fees) is just not enough,” said an Indian startup executive, who did not wish to be named. “The gatekeeper of the biggest application store should be fair and transparent.”

The spats have strained Google’s strong ties to Indian startups. It has invested in some and helped hundreds with product development. In July, its Indian-born CEO Sundar Pichai committed $10 billion in new investments over five to seven years.

Globally, app developers have said a 30% fee is excessive compared with the 2% fees for typical credit card payments processors. Google and rival Apple, which charges a similar fee, have said the amount covers the security and marketing benefits their app stores provide.

On Monday, Paytm’s Sharma posted a newspaper clipping of Google’s decision to defer the fee, saying it “proves who is ruling us”.

In recent days, dozens of Indian entrepreneurs held calls to strategise challenging Google legally and by designing a local mobile application to list apps and reduce dependence on Google.

Leading Indian newspapers carried a front-page ad from Paytm on Monday announcing the launch of a “mini app store”.

“Calling all developers. Let’s build India’s Digital Revolution, together,” the ad said, adding there would be no payment charge when a Paytm wallet or a state-backed payment system is used.

(Reporting by Aditya Kalra in New Delhi and Nivedita Bhattacharjee and Chandini Monnappa in Bengaluru; Editing by Rashmi Aich and Christopher Cushing)

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