Google’s ‘Lagaan,’ an unwarranted 15-30 per cent commission charge levied on in-app purchases and subscriptions, poses a new kind of threat to India’s digital economy.
India’s digital payments infrastructure has ensured a transparent, equitable and easily accessible interface for seamless and secure transactions.
Meanwhile, Google has leveraged its app marketplace to impose entry-barriers for other digital payments service providers.
A reduction of 4 per cent by Google for developers choosing an alternate payment processor other than Google’s Payments Billing System (GPBS) via the User Choice Billing (UCB) route still forces developers to pay an anti-competitive commission to Google, ranging from 11-26 per cent.
While app developers bear additional costs, such as commission fees to third-party payment processors, the larger outcome is an obstacle to profitability for tech-startups.
CCI move
In a response to the directives levied by the Competition Commission of India (CCI), charting eight corrective measures for the tech giant held responsible for clear violations of Section 4 of the Competition Act, Google has failed to address anti-steering clauses, and justifications for service fees, and other charges are imprecise, non-specific, and at best, arbitrary. The freedom of choice for users is limited to in-app purchases for using third-party payment processors, and not to app downloads, leading to a widening divide between users and developers.
The Google ‘Lagaan’ poses a serious issue for India’s growth-story. MSMEs leveraging subscriptions-based business models, or generating revenue through in-app purchases and constituting a large pool of India’s start-up ecosystem, stand to bear onerous costs for leveraging app stores to reach users.
The surging expenses can lead to a direct increase in cost for users, making advanced, resourceful and innovative digital applications inaccessible and unaffordable. Consumers pay more for an app, in-app purchases and subscriptions as app developers and start-ups are obliged to pay huge commissions to Google.
The implications extend to popularly used platforms such as OTT platforms, education-technology platforms, and various others.
Out of the approximate 800 million Indian internet and smartphone users, a large section stands to be left excluded from digital inclusion. The Google ‘Lagaan’ presents an enormous obstacle in India’s pursuits of achieving economic prosperity.
The writer is Director, Alliance of Digital India Foundation